^70 



The War Book 



State of Vermont 
State Board of Education 




Pass J3 S'U) 
Rnnk 



,V'^ 



The War Book 



Clyde M. Hill 

Supervisor of Junior High Schools 
and 

John M. Avery 

Legislative Reference Librarian 



State of Vermont 

n 

State Board of Education 
1918 



p< 



The publication of this Bulletin 

is authorized by the 

State Board of Control 

D« of D. 
APR 22 1918 



MONTPELIER 

CAPITAL CITY PRESS 

1919 



s\' 



r 



INTRODUCTION. 



^^^^^ANY of our homes must furnish their young men 
^ "It yr ^ for the army and navy. This involves a large 
^ JVj_ ^ sacrifice and we may depend upon such homes 
^ ^ to do all that they can to assist their boys in 

OJ^^^EQ accomplishing a victory. Everyone, however, 
must be led to be equally willing to sacrifice for 
the country's welfare. This can only come about when our boys 
and girls and their parents come to understand and appreciate 
the fact that this war is not the concern of any class or group. 
When we are called upon to endure inconveniences in order that 
we may save food or fuel it is not for the purpose of helping a food 
or fuel administrator whoma}^ be located in Washington or in our 
state capital. It is, first of all, to assure that Vermont boys and 
others who have been called to the colors shall have proper food 
and sufficient equipment, and then to assist in preventing the 
starvation of those people who are fighting with us in this great 
cause. 

It is therefore necessary for everyone to know how our 
armies are raised and cared for. We should also understand why 
we must produce and conserve every possible bit of food and fuel. 

This book has been written for the sole purpose of furnishing 
this information to Vermont boys and girls. The State Board of 
Education wishes to express its obhgations to Mr. Charles F. 
Lowe for the careful reading of manuscript and for valuable 
suggestions in reference to the sections dealing with savings 
banks; to Mr. Fred A. Howland for the reading of the manuscript 
and for important suggestions relative to the sections dealing 
with investments; to Mr. Frank C. Williams, Bank Commissioner, 
for valuable suggestions in reference to investments and banking; 
to Captain Stephen S. Cushing of the Adjutant General's ofiice 
and to Mr. Charles Mitchell of the Naval Recruiting Station at 
Montpelier for suggestions relating to the army and navy; to 
the State Fuel Administration for suggestions relating to the 
fuel situation; to Miss Bessie Bacon Goodrich and Miss Mary 



4 INTRODUCTION 

Maud Patrick for help in connection with the sections dealing 
with teaching methods. Free use has been made of the publica- 
tions of the National Security League, the American Bankers' 
Association, and the United States Committee on PubHc In- 
formation. 

M. B. HILLEGAS, 

Commissioner of Education^ 
Montpelier, Vermont, 
January 28, 1918. 



WHY AMERICA FIGHTS. 

The outbreak of the European War in August, 1914, came 
as a complete surprise to the American people. It had always 
been our pohcy to refrain from participation in the August, 
aifairs of Europe, and the rumblings of the war 1^^^- 
clouds that had been hovering over Europe for the years im- 
mediately preceding had not reached our shores. The presi- 
dent immediately issued a neutrality proclamation calling upon 
all Americans to refrain from partisanship. 

''Every man who really loves America will act and speak in 
the true spirit of neutrality," he said, 'Svhich 's the American 
spirit of impartiality and fairness and friendliness Neutrality 
to all concerned .... .It will be easy to excite pas- 

sion and difficult to allay it." 

Notwithstanding America's firm pursuit of a course of strict 
neutrality, the German Imperial Government, through its in- 
sidious spy system, spread a network of intrigue and conspiracy 
throughout the United States which culminated in countless 
explosions in factories and destruction of bridges and industrial 
plants. Disregarding the rights of American citizens traveling 
on the ocean, German submarines attacked and sunk ships on 
which there were passengers. On May 7, 1915 the r^^^ 
Lusitania was torpedoed without warning and 114 Lusitania 
American lives were lost. In response to urgent and earnest 
attempts on the part of our government to secure reparation 
and promises for the discontinuance of such illegal submarine 
warfare, vague and indefinite assurances were made by Germany, 
only to be altogether broken and finally disregarded, when the 
German ambassador in this country handed to Secretary of 
State Lansing on January 31, 1917 a note announcing an un- 
restricted policy of destruction of merchant ships within the war 
zone. 

Almost immediately there resulted the breaking of diplo- 
matic relations with Germany, the exposure of the Breaking off 
rapidly developing machinations of the German Diplomatic 
spy system in this country and Mexico serving 
but to increase the growing tensity of the situation. 



6 WHY AMERICA FIGHTS 

On the second dsij of April, 1917, President Wilson read to 
Congress in ^^^ Congress, assembled in an extraordinary session, 
Special pursuant to executive proclamation, his message, 

ession. from which the following extracts are quoted: 

^'Gentlemen of the Congress: 

"I have called the Congress into extraordinary session be- 
The Presi- cause there are serious, very serious, choices of 
dent's Mes- policy to be made, and made immediately, which 
®^^^* it is neither right nor constitutionally permissible 

that I should assume the responsibility of making. 

''On the 3rd of February last I officially laid before you the 
extraordinary announcement of the Imperial German Govern- 
ment, that on and after the 1st day of February it was its pur- 
pose to put aside all restraints of law or of humanity and use its 
submarines to sink every vessel that sought to approach either 
the ports of Great Britain and Ireland or the western coasts of 
Europe or any of the ports controlled by the enemies of Germany 
within the Mediterranean. That had seemed to be the object 
The Sub- of the German submarine warfare earlier in the war, 
marine^ but since April of last year the Imperial Govern- 

Gampaign. jj^ent had somewhat restrained the commanders of 
its undersea craft, in conformity with its promise, then given to 
us, that passenger boats should not be sunk, and that due warn- 
ing would be given to all other vessels which its submarines 
might seek to destroy, when no resistance was offered or escape 
attempted, and care taken that their crews were given at least 
fair chance to save their lives in their open boats. The precau- 
tions taken were meager and haphazard enough, as was proved 
in distressing instance after instance in the progress of the cruel 
and unmanly business, but a certain degree of restraint w^as ob- 
served. 

''The new policy has swept every restriction aside. Ves- 
sels of every kind, whatever their flag, their character, their 
cargo, their destination, their errand, have been ruthlessly sent 
to the bottom without warning and without thought of help or 
mercy for those on board, the vessels of friendly neutrals along 
with those of belligerents. Even hospital ships and ships carry- 
ing relief to the sorely bereaved and stricken people of Belgium, 
though the latter were provided with safe conduct through the 
prescribed areas by the German Government itself and were 
distinguished by unmistakable marks of identity, have been 
sunk with the same reckless lack of compassion or of principle. 



WHY AMERICA FIGHTS 7 

''I was for a little while unable to believe that such things 
would in fact be done by any Government that had hitherto sub- 
scribed to the humane practices of civilized nations. Interna- 
tional law had its origin in the attempt to set up Interna- 
some law which w^ould be respected and observed tional Law 
upon the seas, where no nation had right of dominion Shattered. 
and where lay the free highways of the world. By painful stage 
after stage has that law been built up with meager enough results, 
indeed, after all was accomplished that could be accomphshed, 
but always with a clear view, at least, of what the heart and 
conscience of mankind demanded. 

''This minimum of right the German Government has 
swept aside under the plea of retaliation and necessity and be- 
cause it had no weapons which it could use at sea ^ Warfare 
except these, which it is impossible to employ, as Against 
it^ is employing them, without throwing to the Mankind. 
wind all scruples of humanity or of respect for the understand- 
ings that were supposed to underlie the intercourse of the world. 

"I am not now thinking of the loss of property involved, im- 
mense and serious as that is, but only of the wanton and wholesale 
destruction of the lives of noncombatants, men, women, and chil- 
dren, engaged in pursuits which have always, even in the darkest 
periods of modern history, been deemed innocent and legitimate. 
Property can be paid for; the lives of peaceful and innocent people 
can not be. The present German submarine warfare against 
commerce is a warfare against mankind 

''The challenge is to all mankind. Each nation must decide 
for itself how it will meet it. The choice we make for ourselves 
must be made with a moderation of counsel and a temperateness 
of judgment befitting our character and our motives as a Nation. 
We must put excited feelings away. Our motive will not be 
revenge or the victorious assertion of the physical might of the 
Nation, but only the vindication of right, of human right, of 
which we are only a single champion .... 

"With a profound sense of the solemn and even tragical 
character of the step I am taking and of the grave responsibilities 
which it involves, but in unhesitating obedience to what I deem 
my constitutional duty, I advise that the Congress declare the 
recent course of the Imperial German Government ^ 
to be in fact nothing less than war against the Has^ade 
Government and people of the United States; that War upon 
it formally accept the status of belligerent which the United 
has thus iDcen thrust upon it; and that it take im- States. 
mediate steps not only to put the country in a more thorough 



8 WHY AMERICA FIGHTS 

state of defense, but also to exert all its power and employ all 
its resources to bring the Government of the German Empire to 
terms and end the war 

''The world must be made safe for democracy. Its peace 
must be planted upon the tested foundations of political liberty. 
We have no selfish ends to serve. We desire no conquest, no 
dominion. We seek no indemnities for ourselves, no material 
compensation for the sacrifices we shall freely m.ake. We are 
but one of the champions of the rights of mankind. We shall be 
satisfied when those rights have been m_ade as secure as the faith 
and the freedom of nations can make them 

''It is a distressing and oppressive duty, gentlemen of the 
Congress, which I have performed in thus addressing you. There 
are, it may be, many months of fiery trial and sacrifice ahead of 
us. It is a fearful thing to lead this great, peaceful people into 
war, into the most terrible and disastrous of all w^ars, civilization 
itself seeming to be in the balance. 

"But the right is more precious than peace, and we shall 
fight for the things which we have always carried nearest our 
hearts — for democracy, for the right of those who submit to 
authority to have a voice in their own Governments, for the 
rights and liberties of small nations, for a universal dominion of 
right by such a concert of free people as shall bring peace and 
safety to all nations and make the world itself at last free. 

"To such a task we can dedicate our lives and our fortunes, 
everything that we are and everything that we have, with the 
pride of those who know that the day has come when America 
is privileged to spend her blood and her might for the principles 
that gave her birth and happiness and the peace which she has 
treasured. 

"God helping her, she can do no other." 

On the sixth day of April the House of Representatives 
passed the following joint resolution which had already been 
passed by the Senate : 

"Whereas, the Impej'ial German Government has com- 
mitted repeated acts of war against the Government and the 
people of the United States of America; Therefore, be it 

"Resolved by the Senate and House of Representatives of 
the United States of America in Congress assembled, That the 
state of war between the United States and the Imperial German 
Declaration Government, which has thus been thrust upon the 
of War. United States is hereby formally declared ; and that 

the President be, and he is hereby, authorized and directed to 



WHY AMERICA FIGHTS 9 

employ the entire naval and military forces of the United States 
and the resources of the Government to carry on war against the 
Imperial German Government; and to bring the conflict to a 
successful termination all the resources of the country are hereby 
pledged by the Congress of the United States." 

Why America is fighting Germany is the question here 
answered by Secretary of the Interior Lane: 

''W^hy are we fighting Germ.any? The brief answer is that 
ours is a war of self-defense. We did not wish to yy^y the 
fight Germany. She made the attack upon us; not United 
on our shores, but on our ships, our lives, our rights, States 
our future. For two years and more we held to a ^i^^ts. 
neutrality that made us apologists for things which outraged man's 
common sense of fair play and humanity. At each new offense — 
the invasion of Belgium, the killing of civilian Belgians, the at- 
tacks on Scarborough and other defenseless towns, the laying of 
mines in neutral waters, the fencing off of the seas — and on and 
on through the months we said: 'This is war — archaic, uncivil- 
ized war, but war! All rules have been thrown away : all nobility ; 
man has come down to the primitive brute. And while we can- 
not justify we will not intervene. It is not our war! 

''Then why are we in? Because we could not keep out. 
The invasion of Belgium, which opened the war, led to the in- 
vasion of the United States by slow, steady, logical steps. Our 
sympathies evolved into a conviction of self-interest. Our love 
of fair play ripened into alarm at our own peril. 

"And so we came into this war for ourselves. It is a war to 
save America — to preserve self-respect, to justify our right to live 
as we have lived, not as some one else wishes us to live. In the 
name of freedom we challenge with ships and men, money, and 
an undaunted spirit, that word 'Verboten' which Germany has 
written upon the sea and upon the land. For The Spirit 
America is not the name of so much territory. It of America 
is a living spirit, born in travail, grown in the rough Must Live. 
school of bitter experiences, a living spirit which has purpose and 
pride, and conscience — knows why it wishes to live and to what 
end, knows how it comes to be respected of the world, and hopes 
to retain that respect by living on with the light of Lincoln's love 
of man as its Old and New Testament. It is more precious 
that this America should live than that we Americans should 
live. And this America, as we now see, has been challenged 
from the first of this war by the strong arm of a power that has 
no sympathy with our purpose and will not hesitate to destroy 



10 WHY AMERICA FIGHTS 

Us if the law that we respect, the rights that are to Us sacred, of 
the spirit that we have, stand across her set will to make this 
world bow before her policies, backed by her organized and 
scientific military system. The world of Christ— a neglected 
but not a rejected Christ — has come again face to face with the 

Avorld of Mahomet, who willed to win by force 

''America speaks for the world in fighting Germany. Mark 
'on a map those countries which are Germany's allies and you 
will mark but four, running from the Baltic through Austria 
and Bulgaria to Turkey. All the other nations the whole 'globe 
around are in arms against her or are unable to move. There is 
deep meaning in this. We fight with the world for an honest 
world in which nations keep their word, for a world in which 
iiations do not live by swagger or by threat, for a world in which 
men think of the ways in which they can conquer the common 
cruelties of nature instead of inventing more horrible cruelties 
For the to inflict upon the spirit and body of man, for a 

Common world in which the ambition or the philosophy of a 
Man, j-g..^, shall not make miserable all mankind, for a 

world in which the man is held more precious than the machine, 
the system, or the state." 

That the history of the United States made certain the entry 
<of our country into the great war was shown by the Secretary 
of War, Newton D. Baker, when in a speech he said: 

"Things have come to a pass in this world where all man- 
kind must choose vrhether the nations of the earth are to be 
Militarism autocratic in their government and militarist 
or Demo- in their pretensions or democratic in their govern- 
cracy. ments and just in their pretensions. 

''America has chosen — nay, she chose in 1776 — that she 
America's intended to be democratic in her policies and in 
Choice. her government, and our whole history of more than 

100 years justifies the statement that our people are wedded and 
devoted to the idea of international justice as the rule upon which 
nations shall live together in peace and amity upon the earth. 

"So that when we entered this war we entered it in order 
that we and our children and our children's children might 
For Our fabricate a new and better civilization under better 

Children conditions, enjoying liberty of person, liberty of 
belief, freedom of speech and freedom as to our political institu- 
tions. We entered this war to remove from ourselves, our chil^ 
dren and our children's children the menace which threatened 
to deny us that right." 



WHY AMERICA FIGHTS 11 

Secretary of State Lansing in speaking of our war aims, said: 

''Let us understand once for all that this is no war to es- 
tablish an abstract principle of right. It is a war in which the 
future of the United States is at stake. If any one among you 
has the idea that we are fighting others' battles and not our own, 
the sooner he gets away from that idea the better it will be for 
him, the better it will be for all of us. 

''Imagine Germany victor in Europe because the United 
States remained neutral. Who, then, think you, would be the 
next victim of those who are seeking to be masters of the whole 
earth? Would not this democracy be the only obstacle between 
the autocratic rulers of Germany and their supreme ambition? 
Do you think that they would withhold their hand from so rich a 
prize? 

"Let me, then, ask you, would it be easier or wiser for this 
country single-handed to resist a German Empire flushed with 
victory and with great armies and navies at its Alone or 
command than to unite with the brave enemies with Allies? 
of that empire in ending now and for all time this menace to 
our future? 

"I know that some among you may consider the idea that 
Germany would attack us if she won this war to be improbable; 
but let him who doubts remember that the improba- The Impos- 
ble, yes, the impossible, has been happening in this sible has 
war from the beginning. If you had been told prior Happened. 
to August, 1914, that the German Government would disregard 
its solemn treaties and send its armies into Belgium, would wan- 
tonly burn Louvain, would murder defenseless people, would ex- 
tort ransoms from conquered cities, would carry away men and 
women into slavery, would like Vandals of old, destroy some of 
history's most cherished monuments, and would with malicious 
purpose lay waste the fairest fields of France and Belgium, you 
would have indignantly denied the possibility. You would have 
exclaimed that Germans, lovers of art and learning, would never 
permit such foul deeds. Today you know that the unbelievable 
has happened, that all these crimes have been committed, not 
under the impulse of passion, but under official orders. 

"Again, if you had been told before the war that German 
submarine commanders would sink peaceful vessels of commerce 
and send to sudden death men, women, and little children, you 
would have declared such scientific brutality to be impossible. 
Or, if you had been told that German aviators would fly over 
thickly populated cities scattering missiles of death and destruc- 



12 WHY AMERICA FIGHTS 

tion, with no other purpose than to terrorize the innocent in- 
habitants, you would have denounced the very thought as un- 
worthy of belief and as a calumny upon German honor. Yet, 
God help us, these things have come to pass, and Iron Crosses 
have rewarded the perpetrators." 



GERMANY'S WAR AIMS. 

As a contrast to the aims and purposes of the United States 
in the war as stated above by her leaders, President Wilson and 
Secretaries Lansing, Baker and Lane, the objects of the German 
warfare may best be shown by quotations from the writings of 
prominent Germans and from official German documents. 

The idea that upon Germany had been imposed by divine 
command the duty of spreading German culture r^^^ 
throughout the world and imposing German rule German 
upon all nations is most clearl}^ expressed in the ission 
proclamations and speeches of the present kaiser. In a procla- 
mation to the Army of the East issued in 1914 William II said: 

". . . . Remember that you are the chosen people! The 
Spirit of the Lord has descended upon me because I am the Em- 
peror of the Germans! 

'^I am the instrument of the Almighty. I am his sword, 
his agent. Woe and death to those who shall op- By Divine 
pose my will! Woe and death to those who do not Ri^ht. 
believe in my mission! Woe and death to the cowards! 

''Let them perish, all the enemies of the German people! 
God demands their destruction, God who, by my mouth, bids 
you to do His will!" 

In a speech made in 1905, nine years before the outbreak 
of the war the emperor said: 

''God would never have taken such great pains with our 
German Fatherland and its people if He had not *'A Cliosen 
been preparing us for something still greater. We People." 
are the salt of the earth." 

As bearing upon the purposes of Germany in the present 
war William II in a proclamation dated June 1915, said* 

"The triumph of the greater Germany, w^hich some day must 
dominate all Europe is the single end for Vvdiich we are fighting." 

That the Imperial German Government has for years con- 
sidered the United States as an eventual military opponent is 
evident from the writings of her mifitary authors. In a pamphlet 
published in 1901 for the purpose of encouraging military study 
n the Army and Navy Club of Berlin written by Baron Franz 



14 GERMANY'S WAR AIMS 

Von Edelsheim there is outlined a plan for the invasion of the 
United States from which the following extracts are quoted: 

''The question for us to consider is what plans must eventual- 
Military ly be developed to put a stop to the overreachings 
Designs on by the United States which are detrimental to 
the United our interests. It is by armed action that we must 
States. ultimately enforce our will upon that countr}^ 

''To achieve that purpose, our prime instrument in this 
case is our Navy. The German fleet would have every prospect 
of victoriously encountering the naval forces of the United States, 
as those forces are divided into two sections separated by two 
oceans (Atlantic and Pacific), which are a great distance apart. 
But the defeat of her fleet would not compel the United States 
to sue for immediate peace, because of the vastness of her terri- 
tory and the immensity of her resources. Indeed, even further 
successes at sea would not force America to yield, partly because 
her commercial ports are so well fortified that we could not cap- 
ture them without heavy losses, and partly because it would be 
impossible for our naval forces to blockade them all simultaneous- 

ly 

. "It is evident, therefore, that naval operations alone would 
not suffice to bring about the result which we desire. What is 
needed is combined action by sea and land. Owing to the vast 
area of the United States it would be out of the question for an 
army to invade the interior with a view to the conquest of the 
country. But there is good reason to expect that military opera- 
tions on the Atlantic coast would prove to be a victorious enter- 
prise. Moreover, the cutting off of the main arteries through 
which exports from the entire country pass would create such 
a depressed state of affairs that the Government w^ould be willing 
to offer us fair conditions of peace 

"Indeed it is questionable whether it would be wise to occupy 
for any prolonged period any large portion of American territory. 
The mere fact of one or two of their States being invaded would 
not induce the Americans to ask for peace. They would, how- 
ever, find themselves obliged to do so owing to the enormous 
material loss which would be inflicted upon the entire country 
by our capturing several of the large Atlantic seaport towns, at 
which converge the threads of the whole wealth of the nation.'' 

The real intentions of Germany toward the United States 
during the three years of the European war are well exemplified 



GERMANY'S WAR AIMS 15 

by the letter of instructions given by the German Attempts 
secretary for foreign affairs to the German minister ^" Mexico. 
to Mexico in the following dispatch dated January 19, 1917: 

''On the 1st of February we intend to begin unrestricted 
submarine warfare. In spite of this, it is our intention to en- 
deavor to keep the United States of America neutral. 

''If this attempt is not successful, we propose an alliance with 
Mexico on the following basis : That we shall make war together 
and together make peace. We shall give general financial sup- 
port, and it is understood that Mexico is to reconquer the lost 
territory in New Mexico, Texas and Arizona. The details are 
left to you for settlement. 

"You are instructed to inform the President of Mexico of 
the above, in the greatest confidence, as soon as it is certain that 
there will be an outbreak of war with the United States, and to 
suggest that the President of Mexico, on his own initiative, 
should communicate with Japan suggesting adherence at once 
to this plan. At the same time he should offer to mediate be- 
tween Germany and Japan. 

"Please call to the attention of the President of Mexico that 
the employment of ruthless submarine warfare now promises to 
compel England to make peace in a few months." 

President Wilson in his speech delivered flag day, 1917, 
gave expression to what has long been known to Europeans to 
have been the true meaning of the Germ.an aggressions when he 
said: 

"The demands made by Austria upon Serbia were a mere 
single step in a plan which compassed Europe and Asia, from 
Berlin to Bagdad. They hoped those demands might not arouse 
Europe, but they meant to press them whether they did or not, 
for they thought themselves ready for the final issue of arms. 

"Their plan was to throw a broad belt of German military 
power and political control across the very center of Europe and 
beyond the Mediterranean into the heart of Asia; and Austria- 
Hungary was to be as much their tool and pawn as Imperial 
Serbia or Bulgaria or Turkey or the ponderous Ambitions. ' 
states of the East. Austria-Hungary, indeed, was to become 
part of the Central German Empire, absorbed and dominated by 
the same forces and influences that had originally cemented the 
German states themselves. The dream had its heart at Berlin, 
It could have had a heart nowhere else." 



16 GERMANY'S WAR AIMS 

Nor were the dreams of Germany confined to the boundary 
of the old world. German commercial agents in South America 
had for years been laying the foundations of what they hoped 
would be a great German state. Maps of South America, as it 
would be in 1950, in German books show the southern third of the 
continent as a great German state. The conflict between free 
An Inevita- America and imperial Germany, between the 
ble Conflict liberty of the common man under the American 
system, or the abject slavery of the subject to a German kaiser 
was an inevitable conflict. 



OUR ARMY AND NAVY. 

Upon the declaration of war there was at once imposed upon 
the country the duty of gathering together the resources of 
the nation in men, money and materials. As forecasted in 
the message of the president the management of the war ''will 
involve the organization and mobilization of all the material 
resources of the country to supply the materials of Organizing 
war and serve the incidental needs of the Nation in for War 
the most abundant and yet the most economical and efficient 
way possible. 

''It will involve the immediate full equipment of the Navy in 
all respects, but particularly in supplying it with the best means 
of dealing with the enemy's submarines. 

''It will involve the immediate addition to the armed forces 
of the United States, already provided for by law in case of war, 
of at least 500,000 men who should, in my opinion, be chosen 
upon the principle of universal liability to service, and also the 
authorization of subsequent additional increments of equal 
force so soon as they may be needed and can be handled in 
training. 

"It will involve also, of course, the granting of adequate 
credits to the Government sustained, I hope, so far as they can 
equitably be sustained by the present generation, by well-con- 
ceived taxation." 

The miHtary arrangements immediately made provided for 
the raising of an army of approximately 1,200,000 men. As 
here outlined by the secretary of war the problem Raising an 
of raising the army was attacked : Army. 

"As you know, the Congress of the United States has or- 
dained that we shall undertake extensive military preparation. 
It is provided that the Army of the United States shall consist of 
the Regular Army, the National Guard, and the National Army. 

"The Regular Army and National Guard recruited to war 
strength, and to them ought to be added 500,000 young men be- 
tween the ages of 21 and 31, drawn from the body The Draft 
of our country by selective processes which will Law. 
recognize the needs of industry, the needs of dependents, and 
those relations in life which ought not to be sacrificed if our 
national strength is to be preserved to its maximum efficiency." 



18 OUR ARMY AND NAVY 

As a matter of fact it was found necessary to raise by the 
first draft 687,000' men. To do this the following plan was 
adopted. All men between the ages of 21 and 31 were required 
Registra- to register on registration day, June 5, 1917. The 
tion. ijg^g Qf ^hose registering were made up and numbers 

for each registered man were assigned. These numbers were 
drawn by lot at Washington, the order in which they were drawn 
being the order in which the men were later called before the 
local boards throughout the country for examination. As the 
men were examined, some were excused from service because of 
physical unfitness, relatives dependent upon them for support 
or other reasons for which the law provided. In this way the 
687,000 men were secured. 

The draft law provides that other drafts may be made from 
time to time from the men who registered. In a letter sent 
by Provost Marshal General Crowder to the local and district 
boards throughout the country the plan to be adopted in the 
second and additional drafts was outlined as follows: 

''By the great drawing in Washington the order of availa- 
bility for all men whose circumstances were equal was determined. 
We shall not disturb this order unless some great need of the 
Nation requires it. We shall make four classes of temporary and 
contingent discharges, but within each class (including the class 
of those immediately available) men shall stand in the order de- 
termined by the drawing. 

''The unit for classification is the jurisdiction of a local 
board. The first class in any jurisdiction will meet all calls 
until it is exhausted, whereupon the second class becomes avail- 
able. 

"You have before you a sheet showing the classification 
that must be accomplished. Without permitting yourselves, 
for the moment, to be appalled by the magnitude of the task, I 
Method of ask you to suppose that the 10,000,000 registrants 
Glassifica- jn the United States have been segregated into these 
^^^^' five classes. In Class I we shall then have, in every 

community, immediately available for military service single 
men and a few married men whose removal will not disturb the 
reasonable adequate support of their dependents. In the indus- 
trial and agricultural aspect, we shall then have segregated into 
this class, men who have not especially fitted themselves for 



OUR ARMY AND NAVY 19 

industrial or agricultural pursuits so that our only incursion into 
the labor supply will affect but a small percentage of unskilled 
labor. 

"In Class II we find men who can be taken without disturb- 
ing the support of any dependent and, as I shall presently show 
you, if the necessity of drawing on Class II arrives, we must de- 
mand even from agriculture and industry an adjustment to re- 
place a small percentage of skilled labor affected by the draft- 
men who, while occupying no pivotal or important position, can 
serve industry or agriculture better than unskilled men. 

''Should the pinch of military necessity increase beyond 
Class II, it would mean that the Nation would have to begin to 
commit itself to hardship and to an adjustment in agriculture 
and industry to meet the paramount necessity. We take in 
Class III a very small class of persons upon whom others are 
dependent for support, but we do not break up the closest and 
most sacred of the family relation^nips. We also invade the 
field of agriculture and industry to the extent of taking, in the 
small percentage affected, men who have specialized themselves 
or who occupy rather pivotal positions. 

"In Class IV we find the men whom we shall take as a last 
resort. Before that class is reached it is perfectly safe to say 
that by the addition of other classes as to age, say those who have 
attained 21 since registration day and perhaps adding the classes 
of 18 and 19 and 20 years' old men, we shall have included two 
or three million men in our available list, and thus have saved 
Class IV. 

"Class V comprises the field of absolute exempts." 

The classes referred to in the letter of Provost Marshal 
General Crowder are given in the regulations as below: 

CLASS I. 

Single jnan without dependent relatives. 

Married man, with or without children, or father of mother- 
less children, who has habitually failed to support The Classes. 
his family. 

Married man dependent on wife for support. 

Married man, with or without children, or father of mother- 
less children; man not usefully engaged, family supported by in- 
come independent of his labor. 

Unskilled farm laborer. 

Unskilled industrial laborer. 



20 OUR ARMY AND NAVY 

Registrant by or in respect of whom no deferred classification 
is claimed or made. 

Registrant who fails to submit questionnaire and in respect 
of whom no deferred classification is claimed or made. 

All registrants not included in any other division in this 
schedule. 

CLASS II. 

Married man with children or father of motherless children, 
where such wife or children or such motherless children are not 
mainly dependent upon his labor for support for the reason that 
there are other reasonably certain sources of adequate support 
(excluding earnings or possible earnings from the labor of the 
wife), available, and that the removal of the registrant will not 
deprive such dependents of support. 

Married man, without children, whose wife, although the 
registrant is engaged in a useful occupation, is not mainly de- 
pendent upon his labor for support, for the reason that the wife 
is skilled in some special class of work w^hich she is physically 
able to perform and in which she is employed, or in which there 
is an immediate opening for her under conditions that will enable 
her to support herself decently and without suffering or hardship. 

Necessary skilled farm laborer in necessary agricultural 
enterprise. 

Necessary skilled industrial laborer in necessary industrial 
enterprise. 

CLASS III. 

Man with dependent children (not his own), but toward 
whom he stands in relation of parent. 

Man with dependent aged or infirm parents. 

Man with dependent helpless brothers or sisters. ^ 

County or municipal officer. 

Highly trained fireman or policeman, at least 3 years in 
service of municipality. 

Necessary customhouse clerk. 

Necessary employee of United States in transmission of the 
mails. 

Necessary artificer or workman in United States armory or 
arsenal. 

Necessary employee in service of United States. 



OUR ARMY AND NAVY 21 

Necessary highly speciaHzed technical or mechanical expert 
of necessary industrial enterprise. 

Necessary assistant or associate manager of necessary in- 
dustrial enterprise. 

CLASS IV. 

Man whose wife or children are mainly dependent on his 
labor for support. 

Mariner actually employed in sea service of citizen or mer- 
chant in the United States. 

Necessary sole managing, controlling, or directing head of 
necessary agricultural enterprise. 

CLASS V. 

Officers — legislative, executive, or judicial of the United 
States or of State, Territory, or District of Columbia. 

Regular or duly ordained minister of religion. 

Student who on May 18, 1917 was preparing for ministry 
in recognized school. 

Persons in military or naval service of United States. 

Alien enemy. 

Resident alien (not an enemy) who claims exemption. 

Person totally and permanently physically or mentally 
unfit for military service. 

Person morally unfit to be a soldier of the United States. 

Licensed pilot actually employed in the pursuit of his voca- 
tion. 

Member of well-recognized religious sect or organization, 
organized and existing on May 18, 1917, whose then existing 
creed or principles forbade its members to participate in war in 
any form, and whose religious convictions are against war or 
participation therein. 

The men selected for the national army are ordered to re- 
port at training camps which have been established throughout 
the country. These training camps or cantonments as they are 
called are small cities in themselves with complete lighting, 
sewer and water systems of a size sufficient to accommodate 
about 40,000 men each. In addition to the 16 train- Training 
ing camps for the drafted men of the national army Gamps. 
there are 16 cantonments for the national guard located for the 



22 OUR ARMY AND NAVY 

most part in the southern part of the country. The men drafted 

from New England and a part of those from New York are trained 

at Camp Devens, Ayer, Massachusetts. 

The organization of the navy on a war basis did not present 

so difficult a task as that of the expansion of the land forces of 

the nation, as such a large number of men were not required. 

Figures from the report of the secretary of the navy recently made 

public (December, 1917) show that since January first, 1917 the 

naval force has increased from 4,500 officers and 68,000 men to 

15,000 officers and 254,000 men. At the present 
The Navy. . . . 

time the navy is. recruited almost to its maximum 

strength although it is probable that with the progress of the 

war the maximum strength will be increased, and, of course, 

enUstments will be required to keep it continuously at full 

strength. Training camps for the navy have been estabfished 

at various places, the largest being located at Newport, Rhode 

Island; Norfolk, Virginia; Mare Island, California; Puget Sound, 

Washington and Great Lakes, IlHnois. 



SUPPLYING OUR FORCES. 

Almost equal in difficulty to the task of raising an army and 
navy was the problem presented of equipping and supplying 
the forces to be organized. Not only guns and ammunition 
but also food, clothes, methods of transport and shelter had to 
be provided. Training camps and mobilization camps had to 
be erected. 

Some idea of the actual work necessary in procuring and 
organizing the materials necessary for the war may be gathered 
from the following list prepared by army officers of what is re- 
quired for an army of a million men. 

750,000 rifles and bayonets for them to fight with. 
265,000 pistols— little brothers of the rifle. 
8,000 machines guns, the military scythe. ^j^^^. ^ 

2,100 field guns to batter down attack. Million 

165,000,000 cartridges to carry them into their Men Need. 
first fight, and as many more for each succeeding fight. 

2,500,000 shells and shrapnel for our field guns for every 
hour they are in action. 

196,000 horses to carry them and pull their gun carriages. 

127,000 mules to haul their supplies and pack their guns. 

8,000 wagons to transport their supplies and ammunition. 

1,000,000 cartridge belts for their ammunition. 

1,000,000 first-aid packets to bind up their wounds. 

1,000,000 canteens. 

Each of them must have uniform and equipment : 

1,000,000 shelter-halves to protect them from the weather. 

1,000,000 ponchos to keep them dry. 

2,000,000 blankets to keep them warm. 

2,000,000 pairs of shoes. 

2,000,000 uniform coats, breeches, leggins,suits'of underwear. 

1,000,000 hats. 

2,000,000 shirts. 

4,000,000 pairs of socks. 

1,000,000 haversacks to carry their equipment. 

Finally they must eat : 

1,000,000 pounds of meat each day. 

1,000,000 pounds of bread each day. 

2,000,000 pounds of vegetables each day. 

3,000,000 pints of coffee or tea each day. 



24 SUPPLYING OUR FORCES 

All this must be purchased, transported, prepared and cooked 
each day, and to eat it thev must have : 

1,000,000 cups. 

1,000,000 plates. 

1,000,000 knives. 

1,000,000 forks. 

1,000,000 spoons. 

To provide for proper care, training and lead in battle they 
should have: 

25,000 trained officers. 

Most of the items listed above the government purchases 
from the manufacturers or dealers. Some supplies such as 
ammunition and rifles the government manufactures in its own 
factories and it may at any time build and equip additional 
factories or take over the operation of plants privately owned. 
Because of the increased demands for all sorts of goods prices 
have risen and it has been necessary for the government in 
Fixing many cases to fix a price for which a dealer or manu- 

Prices. facturer must sell his goods. Care is taken to see 

that such price insures the seller a fair i3rofit else there would be 
no encouragement for him to continue in business. 

Two of the biggest problems put up to the United States in 
oonnection with supplies result from the shipbuilding and 
The Need aviation programs. The need for the construction 
for Ships. Qf ghjps and the steps in the program so far made 
are well outlined in the following extract from an article in the 
Current History Magazine: 

''The destruction of allied and neutral shipping since the 
war began in 1914 and the diversion by the Allies of an enorm^ous 
amount of tonnage from normal trade channels had already, 
before the United States became a belligerent, forced this country 
to consider very seriously the problem of creating a mercantile 
marine of its own on a scale commensurate with its commerce. 
Ever since the civil war the United States has occupied a secon- 
dary position as a carrying nation. It has depended upon foreign 
ships for its ocean transportation, although for half a century 
efforts were repeatedly made to establish a mercantile marine. 

''The European war accentuated the problem. The Govern- 
ment was urged to take the matter in hand, and finally President 
AVilson secured the passing of legislation which authorized the 
appointment of a Shipping Board and the creation of a corpora- 



SUPPLYING OUR FORCES 25 

tion to build ships. It was provided that the majority of the 
stock in this corporation should be held by the Government. 
Again there was delay, but our entry into the war hastened events, 
and on April 16, 1917, the Emergency Fleet Corporation was or- 
ganized by the Shipping Board, Congress authorized 

the use of 150,000,000, and work was immediately begun to build 
a vast fleet of both steel and wooden ships to transport supplies 
to the Allies and thus frustrate the German submarine campaign. 
Contracts were awarded to various ship-building firms, and 
shipyards on both the Atlantic and Pacific Coasts began to hum 
with increased activity. 

^'The first warlike act of the United States on entering the 
war was to seize all the German merchant ships laid up in the 
ports of the United States and its insular possessions. As many 
of these ships had been disabled by their crews, work was im- 
mediately begun to repair them. Early in June fourteen of the 
seized ships were assigned to the service of the Navy Department 
and renamed, while at the end of the same month President 
Wilson signed an executive order authorizing the Shipping Board 
to take 'possession and title' of eighty-seven of the German- 
owned ships, representing 500,000 tons." 

Later plans of the Shipping Board provide for the building 
of over 1200 ships of approximately 8,000,000 tons which neces- 
sitates an appropriation of an additional billion dollars bringing 
the total amount required for building, commandeer- Two Billions 
ing and purchasing vessels up to $2,000,000,000. for Ships. 
Three government owned ship building 3^ards for the erection 
of steel ships have been erected or are in process of construction 
at each of which it will be possible, after the first pattern ship 
is turned out, to produce one 5,000 ton steel vessel every two 
working days. 

The war aircraft bill passed by Congress and signed by 
President Wilson on July 24 appropriated $640,000,000 for the 
purchase of airplanes and aviation work. The payment and 
training of a force to man the machines, equipment, overseas 
maintenance, spare parts, flying stations, armament, and scienti- 
fic apparatus is also to be paid for out of the appropriation. 

The magnitude of the task may be understood when it is 
known that the appropriation is greater than the amount ex- 
pended for all army and navy purposes in the year ending June 
30, 1916. 



FOOD AND FUEL. 

In normal times the production and distribution of the food 
supply of our nation is a purely private matter. With the 
Food a Pub- coming of war, however, food assumes a new and 
lie Concern, vital relation to the organization of the country 
and it may prove the decisive factor in winning the war. Upon 
taking the position of Food Administrator, Herbert Hoover 
clearly outlined the needs for greater production 
and more careful conservation of the food supplies 
of the country in a statement from which the following is quoted : 

''The deep obligation is upon us to feed the armies and 
peoples associated with us in this struggle. The diversion of 
40,000,000 of their men to war or war work; the additional mil- 
lions of women drafted to the places of their husbands and broth- 
ers; the toll of the submarine, have all conspired to so reduce 
production that their harvests this autumn will fall 500,000,000 
bushels of grain below their normal production. Always de- 
pendent upon import from other countries for a substantial part 
of their food needs, our western European allies, because of the 
destruction of shipping by submarine and the isolation from the 
normal markets by belligerent lines, are forced to a large degree 
upon our markets, not only as the nearest but as the only market 
capable of relieving their bitter necessities. 

''Therefore, whereas, we exported before the war but 80,- 
Wh t 000,000 bushels of wheat per annum, this year, by 

one means or another, we must find for them 225,- 
000,000 bushels, and this in the face of a short crop. Our best 
will but partly meet their needs, for even then they must reduce 
their bread consumption twenty-five per cent, and it will be war 
bread they must eat — war bread, of which a large proportion 
consists of other cereals. 

"Already the greater call for meat and animal products, due 
to the stress of war on the millions of men on the fighting line 
y. and the enhanced physical labor of populations 

ordinarily subsisting on lighter diets, coupled with 
the inadequate world supply, have compelled our allies to kill 
upward of 33,000,000 head of their stock animals. This is 
burning the candle at both ends, for they are thus stifling their 
annual production. Therefore, not only must we increase their 
supplies of meat and dairy products, but must prepare, as war 



FOOD AND FUEL 27 

goes on, to meet an even greater demand for these necessary 
commodities. 

'Trance and Italy formerly produced their own sugar, while 
England and Ireland imported largely from Germany. Owing 
to the inability of the first named to produce more The Scar- 
than one-third of their needs, and the necessity for cityof Sug- 
the others to import from other markets, they all ^^' 
must come to the West Indies for very large supplies and there- 
fore deplete our resources. 

''Because of the shortage of shipping only the most concen- 
trated of foods, wheat, grain, beef, pork and dairy products and 
sugar can be sent across the seas. Fortunately we have for our 
own use a superabundance of foodstuffs of other kinds — the 
perishables, fish, corn, and other cereals — ^and surely our first 
manifest duty is to substitute for those other products which are 
of greater use to our fellow fighters." 

The law passed by Congress under w^hich the food adminis- 
tration was established is known as the food control law and has 
for its main purpose the control of the distribution r^^^ Food 
of foods, fuel, fertilizers and implements used in the Control 
production of food. To secure this control pro- ^^^* 
vision is made for licensing dealers in food stuffs, requisitioning 
supplies for the government for war purposes, preventing specu- 
lation in necessities, giving authority to the president to buy and 
sell certain commodities, fixing a minimum price for wheat, ap- 
propriating money to enable the government to buy fertilizers 
and sell the same to farmers, imposing severe penalties against 
hoarding foods, giving authority to the president to establish 
a fuel administration which should supervise the production, 
distribution and fixing of coal prices with authority to take over 
and operate mines. 

The need for the establishment of control over fuels arises 
from several causes. The severe winter and late spring of last 
year used up completely the fuel supply which was r^^^ p^^j 
on hand, it being estimated that as a result of this Shortage, 
one factor there is a need for tw enty-five per cent more coal and 
wood in Vermont this year than in former years. The rapid 
expansion of the army and navy causing a demand Four Million 
for coal for use in camps, munition factories and J,^^^ ^^ 
battle ships requires 4,000,000 tons of coal more Army and 
than the normal supply. Because of the operation Navy. 



28 FOOD AND FUEL 

of the selective draft law many miners have been drawn from the 
mines and thus there has been a labor shortage when the need 
for increased production was greatest. Because of the unusual 
traffic on the railroads due to the movement of troops, supplies 
for the cantonments and for the various factories engaged in 
producing war equipment, there has been a much greater con- 
sumption of coal by the railroads than normally. All of these 
factors combined caused the government to organize the fuel 
administration, and make it necessary that throughout the 
country the greatest care be taken in conserving fuel, and fore- 
sight be used in securing so far as possible supplies of coal and 
wood not only for this but for next year. 



THE WORK OF RELIEF. 

Some of the most efficient work of caring for our soldiers 
and sailors, in looking after their physical comfort and furnishing 
amusement in their hours of leisure is done by organizations 
independent of the army and navy, although officially recog- 
nized and commended by the government. These organizations 
rely for financial support upon gifts from the general public. 
Of most conspicuous usefulness along this line m_ay The Red 
be mentioned the Red Cross, the Young Men's Cross. 
Christian Association and the Knights of Columbus. There is 
here given a statement of the work which the American Red 
Cross does, quoted from a pamphlet issued by that organization : 

"The American Red Cross has enlisted, organized and 
equipped 49 hospital units made up of the finest 
doctors and nurses in the country, competent to hospitals. 
care for 25,000 patients at one time; more than 10,000 Red 
Cross nurses, in addition to 3,000 on active duty, are enrolled 
for service as needed. It has turned over to the Army Medical 
Corps more than 12 hospital units which are now serving in 
France. One of these hospitals was bombed by a German 
aviator not long ago at eleven o'clock at night. Within one 
minute after the final explosion the doctors and nurses were at 
work gathering up the wounded and the surgeons operated all 
night to save the soldier-patients who had been twice wounded. 

'Tt has distributed nearly half a million sweaters and other 
knitted garments for soldiers' use. In addition to Knitted 
comfort kits and many other contributions to the Goods. 
welfare of those in camp and active service, it has sent a Christ- 
mas gift to every man in service abroad and to hundreds of thous- 
ands of those in training at home. It has given soldiers en route 
to camp a hearty welcome at a thousand American railroad sta- 
tions. One little town in Iowa served 1142 men with home-made 
apple pie in a single day, and every man got a quarter of a pie. 

'Tt has established rest stations, infirmaries and canteens 
along the line of communication of the American Army in France, 
to care for those who drop out in case of sickness. Some of these 
canteens can feed a thousand soldiers an hour. It is preparing 
splendid recuperation camps to w^hich men can go to keep them- 
selves fit for fighting; it is providing recreation and cheer for 
convalescents in the hospitals. 



30 THE WORK OF RELIEF 

''It is helping to care for the wounded in the Great War, 
for your own boy in the American Army, and for his AUies. It 
is doing this by maintaining, in whole or part, five hospitals in 
Surgical France and four in England; by supplying to 3,500 

Dressings military hospitals in France surgical dressings, drugs, 
and Sup- apparatus and other needful supplies, gathered from 
plies. g^Jj Q^gj. ^Yie United States and held in great ware- 

houses in France for use as needed. Thirteen million surgical 
dressings, hospital articles and garments have been shipped 
abroad by the American Red Cross since April 1, 1917. 

'Tt has organized its Chapters in every State for Home Ser- 
vice to the families of American soldiers and sailors, supple- 
menting Government grants of money by all the friendly assist- 
ance which intelligent and sympathetic workers can provide. 
Similarly it has appropriated One Million Dollars for relief of 
sick French soldiers and their families. One of the greatest 
services that the Red Cross can render in this war is to lojk alter 
the families at home. A man will be a better fighter at the front 
when he knows that his family is properlj^ cared for at honr.e . . 

''It has opened refuges and hospitals for French war or- 
War Or- phans and other sick and neglected children in 
phans. France and Belgium, and has sent doctors to care 

for mothers and babies so as to save the next generation for France. 

"It is helping to care for half a million tuberculosis victims 
in France, maintaining its own sanitariums, looking out for 
Recon- children who have been exposed to infection, 

struction visiting and relieving the families of those who are 
Work. jQ There are more than half a million cases of 

tuberculosis in France now. 

"It is helping in the tremendous task of restoring a million 
and a half French refugees to normal life. Four warehouses in 
the devastated zones are filled with food, clothing, furniture, tools 
and household goods of many sorts which are distributed to 
many families. Ruined villages are being rebuilt, farms are 
being tilled again, families are being reunited, because the Red 
Cross is there to help. 

"It has gone speedily to the relief of Italy with three-quarters 
of a million dollars and nearly fifty carloads of needful supplies. 
It has carried aid to Russia and Belgium and is helping to feed 
and clothe the miserable remnants of the people of Serbia. It 
is sending more than a miUion dollars' worth of necessary sup- 
plies to Roumania, where soldiers' wounds have been treated 
with sawdust for lack of just such help." 



THE WORK OF RELIEF 31 

As is evident from the above, the Red Cross, in addition 
to the work on the battlefields and in hospitals, furnishes aid 
for the civilian population of devastated countries. A remark- 
able instance of the efficiency of the Red Cross in Emergency 
this capacity is shown by the speed with which Work. 
phj^sicians and nurses with medical and surgical supplies and 
food were rushed to the scene of the recent Halifax disaster. 

The Young Men's Christian Association in cooperation 
with the Young Men's Hebrew Association has y m G A 
established buildings throughout the cantonments 
in this country and is erecting buildings at the army camps in 
Europe. These buildings are in charge of secretaries appointed 
by the association and have large meeting rooms Amuse- 
for moving picture entertainments and concerts, ments for 
correspondence facifities, rooms for educational 
classes, also games and phonographs. The buildings will also be 
available for rehgious services. Similar buildings have also been 
erected or are in process of construction by the . ^ 

Knights of Columbus. At these buildings and at 
other places throughout the camps, both in this country 
and in Europe, and on ship-board, there are camp libraries 
furnished by the American Library Association, 
which provide reading matter for the soldiers 
and sailors. 



PAYING FOR THE WAR. 

The assembling of a vast army and navy, the production 
and transportation of suppHes and munitions of war, the build- 
ing of a great fleet of transport and cargo-carrying ships, the 
furnishing of financial aid to our allies, all require that the govern- 
ment raise vast sums of money far in excess of any pre-war 
requirements. 

For the first year of the war, the business year of the govern- 
ment which ends June 30, 1918, it is estim.ated that our expendi- 
Money tures including seven billions of dollars loaned to our 

Needs of allies will total over eighteen billion dollars. It is 
difficult to conceive of such a large sum of money. 
If it were all in one dollar bills laid on the ground like a carpet 
it would make a belt eighteen feet wide, wider than the average 
school-room, extending all the wa}^ around the world. 

There are two ways for the government to raise money. 
The constitution provides that ''Congress shall have power to 
lay and collect taxes" and ''to borrow money on the credit of the 
United States." It has been estimated that the tax laws in 
effect when war was declared would raise approximately one 
billion dollars this business year. When this amount was sub- 
tracted from the eighteen billion dollars required this year there 
was left to Congress the problem of securing by additional taxes 
or by loans seventeen billion dollars. 

After several m.onths of debate Congress finally passed a 
war tax bill laying taxes which it is estimated will bring into the 
treasury about two and a half billion dollars. The principal 
„, ^ sources of this vast increase are increased taxes on 

incorres, liquors and tobacco; taxes on excess or war 
profits; taxes on facilities furnished by public utifity companies 
as railroad transportation and freight, express, telephone and 
telegraph service; taxes on automobiles, musical instruments, 
sporting goods and jewelry; taxes on perfumery, chewing gum 
and patent medicines; taxes on admissions to amusements; 
increased postal charges. 



PAYING FOR THE WAR 33 

The government has inaugurated a program of securing 
funds directly from, the people by a sale of Uberty bonds. Al- 
ready over five billion dollars worth of these bonds Liberty 
have been sold and additional issues have been Bonds. 
authorized by Congress. Authority has been granted for an 
issue of war savings certificates and stamps to the sum of two 
billion dollars, a method by which even the smallest investor 
may hold government securities. 

In speaking of the objects for which the liberty bonds are 
issued, Secretary of the Treasury McAdoo said: 

''Money is raised in two vraj^s — by taxation and by bond 
issues. The Congress has just passed a taxation measure which 
imposes heavy burdens upon the American people, but those 
burdens are insignificant as compared with the sacrifices that the 
men who are going to fight for you are going to make. But the 
amount we raise by taxation is not sufficient, and we must raise 
by bond issues betv.^een now and the thirtieth day of June, 1918, 
approximately $14,000,000,000. 

''To w^hat uses are the proceeds of these Government bonds 
to be put? Eight billion dollars is going to be used to equip 
2,000,000 to 2,500,000 soldiers in the field— to furnish them 
arms, ammunition, clothing, food and ordnance — to give them 
the best equipment any soldier ever had; $1,450,000,000 to 
strengthen our Navy and to give every tar upon our battleships, 
our cruisers, our submarine chasers and torpedo-boat destroyers 
the protection he ought to have; $750,000,000 to create an air fleet 
manned by American operators and pilots; $1,300,000,000 or 
more to construct a great merchant marine to preserve the line 
of communication across the Atlantic between America and our 
boys upon the fields of France, and to carry our commerce, the 
products of our farms, of our mines and of our factories to all the 
nations of the earth. 

"A part of those funds will be used to take care of the 
dependent wives and children of the men who go to the Front; 
to pay them just compensation and indemnities for p • ^ * 
partial or total disability; and if their injuries are of Dependents 
such a character that they cannot resume their 
previous occupations we intend to use enough of these funds to 
reeducate them into some form of service where their remaining 
days can be made as happy and useful as possible. 

"We intend also to give to our men the right to buy life 
insurance at cost from the Government. Do you realize what 



34 PAYING FOR THE WAR 

we do to a man when he volunteers or when he is drafted into 
the Army? The moment he puts on the uniform, whether he 
volunteered or was drafted, the Government in effect conscripts 
his earning power above $396 a year. He may have been earning 
in private life $1200 to $5000 per annum — it makes no difference; 
the minute he enters the Army his earnings are reduced to $396. 
In addition to that the Government takes his life, if necessary, 
for his country. The moment he enters the Army or Navy it 
makes no difference how stout his heart or strong his sinews or 
clear his brain or good his eyesight, or how perfect every vital 

function, he cannot get a dollar of life insurance in 
forSoldiers. ^^J life-insurance company in the United States 

except at prohibitive rates. What is our duty? 
Our duty is to restore the destroyed earning power of that 
soldier as far as we can do it by giving him the satisfaction of 
knowing that the Government will not allow his dependent wife 
and children to starve or be dependent upon casual charity. We 
owe it to those men also to restore their insurability." 

Whether the form in which the Government takes our money 
be taxes or loans, in the last analysis the only way the war can 
be paid for is by someone, or better every one, doing ^yithout. 
If our government must have motor trucks, private individuals 
must do without pleasure cars, for both cannot be manufactured. 
Not only must there be a tremendously increased production 
of war goods — ships, shells, guns, rifles, medical supplies, — but 
this production must be made with fewer men, or with women 
transferred to the ranks of industry, as large numbers of men 
have been called to the battle lines. We must therefore do 
without the unnecessary things. ''Extravagance now costs 
blood, the blood of heroes." 



THRIFT. 

There never was a time in the history of the world when 
thrift was so important a subject as it is today. The enormous 
cost of the war and the incident high cost of hving have im- 
pressed upon the minds of the people the necessity of thrift more 
emphatically, more seriously, than ever before in American 
history. It would be difficult to estimate the permanent good 
which will come to us as a nation and as individuals from the 
solemn lessons which the world s greatest war will teach us. 
Not the least valuable of these will be our lessons in importance 
thrift. Saving is a matter of habit. Habits are ^^ Thrift, 
more easily formed in youth than they are changed in age. En- 
forced thrift will entail m.any fancied hardships upon people 
who have never formed the habits of saving. The boys and 
girls of this generation will have strong incentives to save. The 
opportunities for the investment of small amounts are available 
on every hand. It will be easy for our boys and girls to acquire 
a habit of life long value and at the same time to lay by a sum of 
money which may be invested in a farm, stock, or business or 
which may provide for a college education. Psychologists tell 
us that habits are more easily formed if we are interested in 
forming them, — if we derive pleasure and satisfaction from 
doing the thing which we desire to become a habit. The value 
of thrift in the lives of our best informed and most successful 
men is best shown by quoting extracts from their writings on the 
subject. 

A text book on thrift used in the elementary schools of 
Philadelphia answers the question of ''What is thrift?" in this 
way: 

''Thrift is a composite virtue. It includes economy, self- 
denial and saving; but it is no relative of niggardliness or mean- 
ness. The man who would let his grandmother starve; the boy 
who would disregard his parent's rightful wishes is not thrifty, 
but a brute in the former case, and the makings of a brute in the 
latter case. 



S6 THRIFT 

''Any virtue that is carried to extremes becomes undesirable 
and no longer a virtue. The thrift that does not make a man. 
^- . charitable sours into avarice. Thrift means better 

Thrift? homes, better citizens, more comforts, more enjoy- 

ments, little waste, little anxiety — peace. Out of it 
grows productive energy, steady courage, opportunity, inde- 
pendence, self-respect, aimfulness in life, manhood. It is the 
one .material habit that has no shady side. It is acquired little 
by little— a steady pressure (in the right direction) until it be- 
comes second nature to save and thrift becomes a habit. 

Figure how much you can save. 

Not how much you will have to spend ; 

By the first way you encourage a savings frame of mind, 

By the second you keep your spending frame of mind." 

There follow quotations from a thrift talk to men by 
W. H. Kniffen, vice-president First National Bank, Jamaica, 
New York. 

''Before you can practice a virtue you must know what it is. 
When we speak of thrifty people, we are apt to picture them 
living on cheap food, in cheap quarters, wearing shabby clothes, 
having little or no pleasures, and saving every cent possible. 
What But that is not thrift — far from it. Thrift is a 

thrift is not. greater virtue than the mere saving of money. 
Don't forget that. 

''The prudent man looks ahead and gets ready. The frugal 
man Hves carefully and saves persistently. The economical 

man spends judiciously, buys wisely and wastes 
fen's defini- nothing. The industrious man works hard and 
Th"-f^^ saves hard; the miser hoards; but the man of thrift 

earns largely, spends wisely, plans carefully, manages 
economically and saves consistently. Thrift is all of prudence, 
economy, frugality and industry — and ''then some." Thrift 
is that instinct of the dog that buries the bone he doesn't want 
for to-morrow's wants; the instinct of the squirrel that knows 
nutting is out of season in winter 

''To enumerate the benefits of thrift would be equivalent 
to enumerating the benefits of a sound body, for all that health 



THRIFT 37 

is to the physical man thrift is to the temperamental Thrift is a 
and the material. Thrift is conducive to good Good Habit. 
habits, and inasmuch as good habits make good character, 
thrift is good character. 

"Thrift is the antidote of worry, which is the most distressing 
of human emotions. To worry about the future is xhrift an 
common to man, but not to the animals — they work Antidote 
for the future and plan for it. Thrift avoids the ^^ ^^^^' 
worries of Hfe as no other habit can. It is good medicine for the 
blues. 

''Thrift does for the individual what thrift does for the 
nation — it makes for strength. It is the surest foundation 
upon which a man can build. Note the successful Thrift 
men of your town. Do they waste their substance? niakes for 
Do they live beyond their means? Yea, verily, ^^"^ 
they are the frugal men, the solid men, the thrifty men. They 
have managed well. 

''The thrifty man does not live on mush and milk, but on 
porterhouse — treated right. He does not wear shabby clothes, 
but well-tailored ones — treated right. He has few amusements, 
but good ones. He does not go out often, but goes well when he 
does — and remembers it, because of the quality and the rareness. 
Theaters every night are bores. 

"This virtue of thrift is the most important habit you can 
cultivate, the most profitable and the most satisfactory. You 
can see what it does^it works here, not hereafter. Waste is the 
most costly evil you can tolerate in your material waste, a 
life. Thrift will get you further up life's ladder than Costly 
any other quality, and waste will carry you down ^ ^^* 
faster. Thrift of time will do more to give you an education 
than all the colleges, and thrift of food will make you better fed 
than a Broadway habitue. Thrift of money will make you 
independent of the loan shark, the pawnbroker and the land- 
lord. ... 

''First learn to distinguish between luxuries and necessities. 
You do not need all you think you need, and certainly not all 



38 THRIFT 

you buy. You want things because you see them — that is 
what shop windows are for. Second, learn to know good value. 
Three Learn where and when and how to buy. Learn to 

Thrift know good meat from bad, nourishing from the 

Rules. worthless. Learn to judge clothing and shoes, and 

buy good material — it pays in the end. Third, keep track of 
your expenses. Know how much it costs you to hve, and how 
much you spend on various items of the household. Limit 
your ''pleasure money' and choose wholesom-e pleasures. If 
you like the theater, learn where to see the good plays at reason- 
able prices, and go consistently. 

''You must reahze, early or late, that if you have one thing 
worth while you may have to do without other things not worth 
while. You m.ust learn that sacrifice means satisfaction. Deny 
yourself little things to get the big. Save on cigars and drinks 
and ride in a car. Save on the car and own a home. 

''Saving mioney is hke swimming; you just save, that's all. 

There is no patent wa3\ You can onl}^ do it by spending less 

Saving than you earn. Twice two makes four, and every 

Means little bit added to what you have makes just a 

Spending ,. , , . ^ . ,-, - \ ^ -, 

Less than httle bit more, and once you get the savmg habit, 

you Earn. yQ^ necessarily find a good bank, open account and 

keep it up — that's all. It's not how hard you work that gets 

you ahead, it's how hard you save! 

''Thrift will bring you success, save you from worry, make you 

a better husband, father and citizen, a better asset to the state. 

What ^ benefactor to your country, and most of all, a 

Thrift will profitable and indispensable employee to the busi- 

^^"' ness in which you are engaged and from wliich you 

make your living. Your job is to make a good living and make 

a good Living long, and thrift will teach you how." 

James J. Hill was born on a farm in Ontario. The death 
of his father when James was very young necessitated his leaving 
James J. school. He obtained employment in a store and 
Hill. received four dollars a month for his services. From 

this modest beginning he became the foremost authority on 



THRIFT 39 

transportation and was one of the leading financiers of America. 
His suggestions on thrift will interest Vermont boys and girls. 

''Thrift is not a virtue of tomorrow, but of today. The 
young man who puts off until he is earning a larger income or has 
satisfied some present want, or for any other reason, the effort to 
spare and accumulate is pretty sure never to begin unless under 
the pressure of misfortune. And it is really true that only the 
beginning is difficult. The first fifty or one hundred dollars 
are slow to gather, and look unimportant even after they have 
been saved. But there is magic in the fact. The income from 
investment, however trifling, confers a sense of power and carries 
a promise that allures. More important than all, a habit of 
saving has begun to push a sprout through the crust of indifference 
and self-indulgence. Independence in character His Idea of 
asserts itself. Purpose strengthens. Possibilities Thrift. 
appear. Thrift is a rare discipline in self-control. Presently 
there is a new man and a new force in the world. 

''Thrift ought to be taught as part of the alphabet of virtue. 
Unless a young man has learned it before he is thirty years of age 
the chances are that he will remain all his life among Must Learn 
the incompetents, the spenders and the wasters. Thrift 
Every man who has saved a dollar has cut one solid Early. 
step in the face of a precipice, where he may momentarily stand. 
Without it he would presently fall into space and be forgotten. 
Resting on it he can cut another foothold, broader and more 
secure. And so all heights are scaled. This is an old prescrip- 
tion for material, m^ental and moral advancement; but it has 
been the law of the world from the beginning, and there is no 
reason to think that it will ever be superseded or that it can ever 
with safety be defied." 

"By thrift we do not mean the hoarding of money, but the 
intelligent saving and investing of it. This saving and wise 
investing — this thrift — must not be confined to mere money and 
other m_aterial wealth, but must be applied to the elements of 
mind and body — for in thrift to make for growth Henry Ford 
there must be a surplus of human power, and in just on Thrift. 
such proportion will the income work for your health and your 
habits, and also lay up a portion of it to have, and to hold, and to 
use when some of the unlooked-for contingencies of life arrive. 

"The great street car systems of the country get their power 
from central stations, direct from generators, but they are also 
ever storing in batteries a sufficient quantity of An Illustra- 
current so that when the producing machinery shall tion. 



40 THRIFT 

be incapacitated for a season there will be something to draw on 
so that the wire may at all times be kept alive and the cars 
moving. 

''Get a battery for yourself, in the shape of a bank account, 
and see that day by day something is stored up for the time when 
either your producing mechanism may be incapacitated or be 
worn beyond repair." 

It was in 1732, nearly two hundred years ago, that Benjamin 
Franklin published his first almanac and began his series of 
"Poor little lessons on thrift that became known as "Poor 

Richard's" Richard's" sayings. 

Sayings. Twenty-five years later, Franklin, to use his 

own words, ''assembled and formed these sayings into a con- 
nected discourse as the harangue of a wise old man to the people 
attending an auction. The piece being universally approved^ 
was copied in all the newspapers of the continent, reprinted in 
Britain on a broadside to be stuck up in houses, two translations 
were made of it into French. In Pennsylvania, as it discouraged 
useless expense in foreign superfluities, some thought it had its 
share of influence in producing that growing plenty of money 
which was observable for several years after its publication." 

No single piece of Amierican literature, it may be confidently 
said, has had the vitality of the address of Father 
Abraham Abraham at the auction. The proverbs are almost 
at the g^g familiar now as they were then. They have been 

published in every language known to man, and are 
to-day to be had at the book stores with "Gulliver's Travels" 
and "Robinson Crusoe". 

How familiar are: 

Time enough proves httle enough. 

Drive thy business, let not thy business drive thee. 

Have you somewhat to do to-morrow, do it to-day. 

It is hard for an empty bag to stand upright. 

Now I have a sheep and cow my neighbors bid me good 
morrow. 

Three removes are as bad as a fire. 

Jf you would have your business done, go; if not, send. 



THRIFT 41 

"But how does it happen that so honorable a word as thrift 
has fallen into a certain disrepute as prosperity has come, a 
disrepute not so much among the wasteful and extravagant as 
am^ong the progressive and enterprising? Why has ' 'thrifty" 
become a mark of low esteem in the eyes of the community? 

''The argument for saving runs so easily into an apology for 
niggardliness, so many evasions of the plain responsibilities of 
the well-to-do are cloaked under the pretense of economy, that 
it has become a question whether what needs most what 
impressing upon any American community is saving Causes 
on the part of those who ought to save, or spending '^^ * 
on the part of those who ought to spend. It has become a ques- 
tion whether the wants of those who want are due most to their 
own improvidence or m^ost to the unvrillingness of the thrifty to 
keep the wheels mxoving. 

''Thrift may properly be described as one of the dangerous 
virtues. In one condition of Hfe and under certain circumstances 
thrift is imiperative. In another condition of life and under 
other circumstances a ''thrifty" mian not only wise 
narrows his own possibilities but closes the door of Economy. 
opportunit}- to everybody else. On one side of the line the main 
duty is to save. On the other side of the line the main duty is 
to use the resources of life freely. Just where the line is drawai 
it miay be hard to say. But the line is there and it is important 
for the individual and for the com^munity to recognize it. 

"Everybody has in mind those of his acquaintances who 
should spend m.ore as well as those who should spend less. 
Everybody knows communities dying of dry rot as well as com- 
munities being over boomed. Everybody can point to farm 
hom.es that should have bathrooms and laundries and furnaces, 
as well as to costly automobiles driven by families with limited 
incomes. 

"There would seem to be two plain duties resting upon in- 
dividuals and communities, one to conserve all the Conserve 
energies and resources with the utmost prodigality Resources 
in the promotion of better living and the opening mote Better 
of wider horizons. Saving by itself is not enough, Living. 



42 THRIFT 

nor economy, nor thrift. There must be the large and generous 
purpose, the noble am^bition, the risk of all in the promotion of 
great undertakings. The man who merely saves and the com- 
munity that m^erely saves is running just as serious risks as the 
man who wastes and the community that wastes." 

Register, Des Moines, Iowa. 

*'When Benjamin FrankHn preached his hard, sound doctrine 

The Driving of thrift and saving to a people well prepared to 

E?^.^*" ?^ profit by his words he had in mind more than the 
Thrift IS ^ f • P 1 , 1 M T 

Wholesome accumulation of m^oney, m.ore than the buildmg up 

E"^^\.r^» of comfort and prosperity. He knew better than 
From "The ^ , i • • ^ , .. . , , 

Youth's m.ost men that the drivmg power of thrift is whole- 

Companion."gQj^g pride, that the shrinking of the sensitive soul 

from pauperism in any shape is the only influence strong enough 

to support hardship and self-denial. And he also knew that this 

independence of character is the backbone of national sanity and 

self-respect. 

' 'Prudence is an unlovely quality. The saints of the Eastern 

and of the Western world have been alike disposed to contemn 

„ . it. But pagan Roir.e ranked it with justice; and 

Husbandry Christian theology, borrowing from Rome, gave 

of Puritan [j- place with the cardinal virtues. If it asks much 
and Quaker . . _,, ,.,111 ^ , 

Laid it gives more. The careful husbandry of early 

^?^J}^^M^^ Puritan and Quaker laid the foundations of wealth, 
of Wealth. 

and m_ade possible education and self-development. 

A race of men and women, reared in robust simplicity, looked the 
world in the face, feared no frugalities, and whined for no favors. 
They did not like to economize any more than we like it now. 
They wanted what they could not afford just as much as we want 
it nov/. But they were a prouder people than we are now. Gen- 
teel mendicancy was as distasteful to their spirits as holding out 
a hat on the street corner. 

''We have grown kinder since those stern days. ^'Service'' 
is now our watchword. In our anxiety to smooth our neighbor's 



THRIFT 43 

path we have pressed the state, the city, the church, ''Service " 
the club, the college into work. We have made the Our 
world a better and a softer place to live in; but the Watchword. 
pride that promoted thrift and fostered independence is waning 
visibly. An immigrant family for whose sore needs a charit- 
able association had appropriated six dollars spent half that 
money in having their pictures taken. They said truthfully and 
touchingly that as long as they hved they might never again 
have a chance to be photographed and that ''if anything happen- 
ed to them" the pictures would be a consolation. They were 
simple, kindly people, but they belonged to a recognized type. 
They would go on asking and receiving alms while they Hved. 

''Three years ago a fam^ous prima donna gave a concert in a 
small town in the Middle West. The tickets were two dollars 
and a half; and a certain minister and his wife — music lovers 
living frugally on a small salary — determined to give themselves 
the rare delight of going. It was a great deal of money to spend 
on a night's entertainment, but such temptation seldom came 
their way. When the point was happily settled they heard that 
a friend and parishioner had been thrown out of work. He was 
in great distress, and there were Httle children to consider. The 
minister's wife had a hard half-hour of renunciation. 
Then she sent the five dollars with a pretty note to 
her neighbor and tried not very successfully to forget the plea- 
sure she had foregone. Two days later she received a rapturous 
note of thanks. The grateful parishioners wrote that the money 
had come like dew from heaven. They had so longed to hear the 
concert, and they had given up all hope, when that blessed letter 
arrived. Five dollars was just enough to biiy the tickets, and 
they would never, never, never forget the enjoyment that so 
kind a friend had given them." 

1. Behave towards your purse as you would to your best 
friend. 

2. View the reckless money spender as a criminal, and shun 
his company. 

3. Dress neatly, not lavishly. A bank pays a higher rate 
of interest than your back. 



44 THRIFT. 

4. Take your amusements judiciously. You 
Lauder's would enjoy them better. 

Ten Thrift 5^ Don't throw away your crusts; eat them. 

They are as strengthening as beef. 

6. It is more exhilarating to feel money in your pocket 
than beer in your storcach. 

7. Remember it only takes twenty shillings to make a 
pound, and twelve pennies to make a shilling. 

8. You can sleep better after a hard day's work than after 
a day's idleness. 

9. Always get good value from tradesmen. They watch 
they get good money from you. 

10. There is as much pleasure in reading a good bankbook 
as a novel. 

''In encouraging the people of America to save, it is believed 

. that the Liberty Loan Bonds are going to perform 

agement to an important function in our national life. The 

?f^^t/j^2P small denomination of some of the bonds renders 

the "Offi- . M 1 r. 1 T 

cial Bulle- it possible for the ordinary wage earner to purchase 

1917" ^^^ ^' ^^^ ^^"^th the savings of a few months, and the banks 

of the country have undertaken to provide for the 

purchase of these bonds in small weekly or monthly payments. 

"By devoting, each week or each month, to the purchase of 
Liberty Loan Bonds such little sums of ready money as are 
A Patriotic often frittered away for useless things one not only 
Duty and^ a can acquire property that ranks among the very 
best securities in the history of the world, but can at 
the same time feel that a patriotic duty has been performed and a 
habit of saving acquired. 

"The ultimate result of this war will be victory for America, 

but what the effects of the war will be upon America 

for Future and American people is unknown. When such 

Contingen- ^ future confronts us prudence demands that we 

provide for contingencies. No one knows how great 

a help savings invested in a Liberty Loan Bond may be a few 



'THRIFT 45 

years hence. And one's savings not only will be secure but will 
be constantly bringing in interest. 



"There are other possibiHties — ^they might better 



Liberty 



be called probabihties — and one is that the Liberty Bonds will 

Loan Bonds, when peace comes and money now in ^^^^ ^} ^ 

. , . , .„ 1 1 . . . Premium. 

active mdustrial use will be seekmg quiet invest- 
ment, may bring a premium." 

''I suppose not many fortunate by-products can come out 
of a war, but if the United States can learn something about 
saving out of this war it will be worth the cost of Worth the 
the war; I mean the literal cost of it in money and Cost of War. 
resources. I suppose we have several times over wasted what, 
we are now about to spend. We have not known that there was 
any limit to our resources; w^e are now finding out that there 
may be if w^e are not careful." — ^From President Wilson's speech 
to the War-Savings Committee. 

Secretary of the Treasury McAdoo authorizes the following 
statement : 

''This war can not be financed unless the American people 
immediately stop waste, practice self-denial, econo- c^ w t 
mize in every possible direction, and lend the money and Practice 
they save thereby to the Government. The cam- Self-Denial, 
paign which opened yesterday for the sale of war- Urges Mc- 
savings stamps in denominations of 25 cents and A^^^- 
$5 is of the utmost im.portance. No such opportunity as this 
has ever been offered to the American people for investing their 
savings with absolute safety and at such attractive rates of inter- 
est. The Government will accept your mone}^ and pay interest 
at the rate of 4 per cent per annum, compounded quarterly. 

"Let every man, woman, and child reflect, as they are about 
to spend even 25 cents wastefully or needlessly, how much that 
25 cents will do for some splendid son of America saxe even 
who is fighting on the battle fields of Europe; how the 
much even 25 cents multiplied by 100,000,000 loyal Quarters. 
and patriotic American citizens will help their Government to 
bring to a quick end this horrible carnage in Europe; how many 
lives of America's noble sons will be saved the sooner the war is 
ended. Every dollar saved will hasten this result. 

"The widespread practice of economy is absolutely vital to 



46 THRIFT 

Widespread ^^® success of the war. My hope is that the war^ 
Economy savings stamp campaign now begun will impress 
Vital. that lesson upon the Am.erican people. Everyone, 

however small his means, can help in this way. 

"I appeal to the heart and patriotism of the American people 
to help their Government and help themselves by a whole-hearted 
support of this war-savings plan." 

The point is emphasized that thrift involves more than mere 
saving. When one has saved money by wise economy he must 
know how to take care of it. He must invest it safely and so that 
Investment ^^ ^'^^^ produce more money for him. Our govern- 
an Element ment needs our money immediately for the success- 
^ ^* * ful prosecution of the war. It could be exacted from 
us in the form of taxes but we are offered the opportunity of 
lending it to our government and in return we shall receive a fair 
rate of interest. Our government is encouraging us to be thrifty 
by making it possible for us to invest even our small savings 
in war savings stamps and government bonds. There is no 
doubt in our minds as to the advisability of purchasing war 
savings stamps from a sense of patriotic duty. This is the highest 
and a sufficient motive. Would a thrifty man desire to make 
such investments if he w^ere not influenced by patriotic impulses? 



INVESTMENTS. 

The word thrift in the minds of some people has come into 

disrepute because at one time thrift meant simply hoarding and 

was associated with parsimony. To-day thrift means more 

than m^ere saving. Wise investment of savings is , 

11 <.ir> AIM- Investment 

an essential element of thrift. A thritty young man is an Essen- 

or woman seeks to invest his savings because it is ^^^}J^^^}P^^^ 

1 1 11- 1 of Thrift. 

safer than to keep them at home and also in order 

that they may produce some income. On account of their inex- 
perience young investors are strongly tempted to make unde- 
sirable investments because they profess to yield large returns. 
Such opportunities are always available but many perfectly safe 
investments are also open in every community to small investors. 
The advice of bankers, reputable brokers, and business men of 
high standing and broad experience in investments should be 
sought by young investors until they have had sufficient ex- 
perience to avoid serious mistakes in exercising their own judg- 
ment as to the value of the investment. The importance of 
this suggestion and the protection afforded investors in this state 
are at once indicated by the following warning issued to the 
public by Frank C. Williams, State Bank Commissioner: 

''There is a heavy penalty for selling or negotiating for sale 
in Vermont, — without a license from the bank commissioner, — 
of any lands situated outside the state, any stocks; BankCom- 
bonds or other securities of any kind or character missioners 
except the following: Bonds of the United States; Warning to 
State of Vermont; m^unicipalities of the state; notes the Public. 
secured by mortgages of real estate in this State ; obligations given 
by individuals who are citizens or legal residents of this State; 
bonds, stocks or notes of corporations vvdiich have been approved 
by the Public Service Commission, or other Governmental au- 
thority of any State or of the United States. Before the invest- 
ment law was passed, hundreds of thousands of dollars of poor 
and worthless securities were annuallj^ sold in Vermont. Proba- 
bly the sale of such securities has not been entirely prevented b}^ 
the law, but I am convinced it has been very greatly reduced, 
and may be entirely stopped by cooperation of the people of the 
State with the Bank Com.missioner. Do not buy any of the 
securities which require a license for their sale, of any one who is 



48 INVESTMENTS 

not able to produce a certificate from the Bank Commissioner 
showing that he has a Hcense to sell them. Inform the Bank 
Commissioner of any cases coming to your attention of attempts 
to sell such securities by unlicensed people. If not familiar 
with the character of securities offered, which you contemplate 
buying, advise with some banker in whom you have confidence. 
The Bank Commissioner does not recommend the securities 
offered by people to whom he grants a license, but he does inves- 
tigate all companies licensed and supervises their business to a 
certain extent, and is always ready to give the people of the State 
all the facts of which he has knowledge relating to the securities 
offered by such companies; their standing and business history. 
Some good business men who have had no experience with in- 
vestments outside a narrow line make poor advisers. Study 
investments yourself. Do not take the chance of losing your 
hard earned money by investing in some schem^e which looks 
good on paper or promises large dividends. Deal only with 
responsible people who are authorized to do business in Vermont." 

The importance of warning the public concerning certain 
present bad practices in investment is emphasized by the wide 
publicity which is being given by the Investment Bankers' 
Association of America to the following schemes of fraudulent 
advertisers : 

''The reason that so many millions of dollars annually are 
sunk in worthless securities is that the sellers of such so-called 
investments make alluring promises of great profits to be derived 
from a few dollars. If deliberate misrepresentations and reck- 
lessly loose statements are eliminated from advertising and cir- 
cular matter, get-rich-quick operators will not be able to make 
their fraudulent schemes pay. 

'Tn investments one does not get something for nothing 
any more readily than in any other branch of merchandising. 
Present ^^ ^^ entirely misleading, therefore, to use statements 

Bad which will lead investors to believe this to be possi- 

Practices. ble, such as the following taken from one piece of 
copy advertising a promotion that failed utterly: 'The best 
investment ever offered to the American public' 'Immense 
profits on small investments.' '1,000,000 a month profits.' 
'You take no chance.' 'Golden Harvest.' 

"Some of the other more dangerous bad practices which in- 
variably mislead are the following: Trading on reputation or 
earning power of another company, such as implying that a new 
automobile company will be as successful as the Ford Motor 



INVESTMENTS 49 

Company, or using a name which sounds similar to a well known 
trade name to imply that the well known person or corporation 
is interested in the new company. Offering securities where 
the corporation has not a well defined financial plan calculated 
to carry the company through poor times, as well as good times. 
Giving undue importance to the name of the banks acting as 
trustee or registrar, and implying thereby that these banks in 
any way are responsible for the securities. The fee for such 
services paid to banks or trust companies is very small, and the 
services do not insure safety of securities. Offering to let peo- 
ple in on the ground floor. Stating that securities are as safe 
as Government bonds. The use, by a dealer concern, of a name 
which implies that it is a bank or trust company when it is not 
such. Using the w^ord guarantee as applying to the security 
when no guaranty exists. Playing up subheads in copy on one 
subject matter in such a way as to make it appear that the sub- 
head emphasizes the security, such as a guaranty on a part of 
an automobile by a manufacturer as implying that the stock 
for sale is guaranteed by that manufacturer etc. Offering to 
give ''Liberty" bonds away with so many shares of suspicious 
stock." 

The successful investor must know what opportunities for 
investment are available, he must know how^ to distinguish 
between good and bad investments, and he must know how to go 
about making the investment which seems to him to be the most 
desirable. 

There is hardly a community in this country remote from a 
savings bank or a bank having a savings department. Such 
institutions receive on deposit small sums of money Savings 
which draw interest at a moderate rate. The rate Banks. 
varies som-ewhat in different banks as it is determined by the 
local institution. The law governing the payment of interest 
on savings accounts in Vermont is : 

Sec. 5429. A savings bank shall, immediately before mak- 
ing each interest payment to savings depositors, reserve from 
the net profits accumulated since the preceding interest pay- 
ment not less than an eighth of one per cent of the average 
amount of deposits during such period, as a surplus fund, until 
such fund amounts to ten per cent of the amount Vermont's 
of deposits and other liabilities, except surplus. Saving Bank 
The accumulation toward such fund shall be set Interest Law- 



50 INVESTMENTS 

aside and held intact and, when the fund amounts to such ten 
per cent, it shall thereafter be maintained and held to meet 
losses in its business from depreciation in securities or otherwise 
and, if at any time it falls below such ten per cent, reservations 
from net profits shall in like manner be renewed until such fund 
again reaches the ten per cent requirement. 

Sec. 5430. A savings bank may pay interest on deposits, 
not to exceed one and three-fourths per cent semi-annually, 
until half of the ten per cent fund described in the preceding 
section shall be accumulated, after which, so long as such ac- 
cumulation does not fall below half of such ten per cent fund, 
the rate may be not to exceed two per cent semi-annually, until 
such ten per cent fund is accumulated. The trustees, so long 
only as such surplus fund equals or exceeds such ten per cent, 
MAY DECLARE, AND PAY SUCH INTEREST ON DEPOSITS 
AS IN THEIR JUDGMENT THE EARNINGS AND RESOURCES 
OF THE CORPORATION, JABOVE SUCH [SURPLUS FUND, 
WARRANT. 

Sec. 5431. Savings banks shall triennially, if the net 
profits above the ten per cent surplus fund amount to one per 
cent of the deposits which have remained in such savings banks 
for one year then next preceding, divide the same among the 
depositors whose deposits have remained therein for at least 
one year then next preceding, in proportion to the amount of 
interest on such deposits which has been declared during the 
three years next preceding. 

Savings banks in Verm.ont may adopt by-laws for their 
government not inconsistent with law hence there is a slight 
variation in the rules regulating the payment of interest and the 
withdrawal of savings deposits. The following regulations taken 
from a bank book of a local savings bank and trust company are 
typical of this state: 

Deposits made on or before the 5th day of the month draw 
interest from the first, and those made after the 5th will draw 
interest from the first day of the following month. (If the de- 
Savings posit is made before the 10th of January or July 
Bank De- it draws interest from the first of the month). In- 
posits and terest will be credited to depositors on the first day 
Interests. ^^ January and July of each year, at the rate of 4 
per cent per annum, and this interest will draw interest from 
\he date of said credit, if not withdrawn, but no interest will be 



INVESTMENTS 51 

allowed or paid on any sum withdrawn for the time which may 
have elapsed since the date of the last credit of interest. The 
above rate is paid, free of taxes, on all deposits. 

All depositors shall be subject to the regulations and by- 
laws of this institution. 

The trustees may refuse a deposit at their discretion, and 
may also at any time return all or part of a deposit. 

Interest or dividends will be credited to depositors only on 
the first days of January and July, and this interest, if not with- 
drawn, draws interest from the date of such credits, compound- 
ing twice every year. 

Depositors, ordinarily, will be paid on demand, but the 
bank reserves the right, when it so desires, to require a notice 
not longer than thirty days for withdrawals. 

A depositor must always present his Bank Book when de- 
positing or withdrawing funds. If not presented personally 
an order properly signed and witnessed must accompany the 
Bank Book in case of withdrawals, i^e^ osits, however, may 
be evidenced by certificates containing tie terms of payment. 

Every effort will be made to protect depositors against 
fraud, but payment made to a person presenting a Bank Book 
shall be good and valid on the account of the owner, unless the 
Bank Book has been lost and notice in writing given to the 
Treasurer of the bank before such payrrent is made. 

When a Bank Book has been lost the Bank shall prescribe 
the conditions on which a new book may be issued. 

If a book of deposit be assigned or transferred by the de- 
positor, it shall be the duty of the person to whom such book 
has been transferred to notify the bank thereof at once for its 
approval. If payment be made on a deposit book after it has 
been assigned, without notice of the assignment, the corpora- 
tion or its officers will not be liable to pay the same to such 
assignee or holder, but will be fully discharged therefrom. 

Instead of sending a check to the depositor in payment of 
interest due him he is simply given credit for the amount of the 
interest just as if he had deposited an equal amount of money. 
This interest draws interest the same as his other Compound 
savings. If one has on deposit $600 on January 1, p^^^^l^*" ^^ 
1916 and the bank pays 4% semi-annually he would Savings 
receive credit for $12 interest on July 1, 1916. If he Banks. 
makes no deposits or withdrawals he would be entitled to interest 
on $612 from July 1, 1916 to January 1. 1917. His deposits at the 



52 INVESTMENTS 

bank then would be 1624.24. Of this amount $624 will draw 
interest for six months more, the cents being disregarded and 
interest being paid on dollars only. Even if no new deposits 
except the interest are made the interest each time is computed 
on a larger principal and hence is more than the preceding interest. 
When interest is paid on principal and interest in this way it is 
called compound interest. 

Money drawing compound interest grows with astonishing 
rapidity. In the following illustrations the interest is com- 
pounded annually. The results are even more amazing when the 
interest is compounded semi-annually. 

''There are two kinds of compound interest. Two illus- 
trations may best explain them. One dollar deposited in a 
savings bank that pays four per cent annually will amount to 
$2.19 in twenty years. This is simple compound interest. 
One dollar, deposited every year for twenty years in the same 
Simple and bank at the same rate of interest, will become $30.97. 
Progressive This is progressive compound interest. To get 
Compound the full and beneficial results of compound interest 
Interest. ^^^ ^j^jy must you begin to save but you must keep 
steadily at it. When you see the effects of progressive saving 
you find out just how valuable it is to get the thrift habit. 

''With humble sums impressive ends may be gained. Nearly 
every human being can save five cents a day. This amount, 
saved each day ($1 . 50 a month) and deposited in a savings 
What 5 bank that pays four per cent interest will amount 

Cents a Day to $182.50 in ten years. It will earn $40.06 
will do in interest, making its total value at the end of that 
ten Years. ^^^^ |225 . 56— rather a surprising result of the 
setting aside of a single carfare every day. 

"Take ten cents a day, which means a deposit of three dollars 
every month, and put it through the same process. In ten years 
you will have saved $365, which will have earned $80.36 interest, 
making a total of $445.36. This is the result of simply saving 
Ten Cents ^^® price of an ordinary cigar a day. As you in- 
a Day will crease the sum saved each day the value of steady 
Amount to saving is only strongly im.pressed. Fifteen cents 
$445.36 in a day, or four dollars and a half saved each month 
Ten Years. ^^-^^ compounded will amount to $668.18 in ten 
years. Of this sum $120.68 is interest earned. Twenty cents 
a day or six dollars a month will amount to $890.99 of which 
$160.99 is interest. These sums saved would scarcely be missed 



INVESTMENTS 53 

from the purse of the average man. If you are able to put aside 
twenty-five cents a day or seven dollars and a half a month, at 
the end of ten years you will find $1,113.75 to your credit. If 
you are able to make the daily saving thirty cents or nine dollars 
a month you will be worth $1,336.59. Forty cents a day or 
twelve dollars a month will roll up the tidy sum of $1,782. 16, of 
which $322. 16 is interest; while fifty cents a day or fifteen dollars 
a month will amount to $2,227.73, of which $402.73 is interest. 
Hence it is much to your profit to ''despise not" the saving of 
small sums. 

''Now let us see what the systematic or rather progressive 
saving of a dollar a week can do. In one year the fifty-two 
dollars saved will earn, at four percent, seventy-eight cents in 
interest, making a working principal of $52.78 at the start of 
the second year. At the close of the second year One Dollar 
you will have $107.67; at the end of the fifth year a Week at 
$285 . 86 ; at the close of the tenth year $633 . 65. In f ^^^J}'"''^^" 
fifteen years this steady savings of a dollar a week Amount to 
would show a total result of $1,056.79. At four $2,197.92 in 
per cent this alone would yield a return of $42.27. 25 Years. 
At the end of twenty years this kind of saving would total. 
$1,571.59, while the first quarter-century would find you worth 
$2,197.92. This sum, if you then stopped saving, at four per 
cent would earn $87.91 a year. If you kept up the saving of a 
dollar each week for fifty years you would accumulate $8,057. 16. 

"Looking at the saving of a dollar a week from a different 
angle, you find that at the end of thirty years every one of the 
fifty-two dollars that you had at the end of the first year had 
increased about fifty-eight times. 

"It has been figured out that a man who has deposited five 
dollars a week, every week, in a savings bank that pays four per 
cent can, at the end of twenty years, draw out six dollars a week 
and still leave his wife at his death all the money that he had 
originally deposited. 

"If a man or woman is able to save a dollar a day the results 
are big. This amount, put into a savings bank that pays four 
per cent annually will amount to $1,967.98 in principal and in- 
terest at the end of five years, and $4,455 . 74 at the end of ten years. 

"Fifty dollars put into a savings bank each j^ear will amount 
to the following sums at the end of twenty years; $50 Saved 
at three per cent annuallv it will aggregate $1,383.38; Each Year 
at three and a half per cent it will roll up $1,463.42; ^nfo^nT^to 
at four per cent it will amount to $1,548.46; at four $i,383.38 in 
and a half per cent annually the total will be 20 'Years. 



54 INVESTMENTS 

$1,639.15, while at five per cent annually it will mean a total 
of $1,735.96. 

''This figuring out of compound interest returns might be 
continued indefinitely. Sufficient results have been given, 
however, to show two very important things that the average 
man or woman who wants to attain a competency must bear in 
mind, and they are: first, that money will earn more money; 
second ,that the only way to share the result of this kind of labor 
is to begin to save and then keep constantly at it. 

''It might be helpful, in this connection, to see some practical 
applications of the benefits of compound interest and saving. 
One of them is what might be called an automatic pension. It 
has been calculated that if a man whose income remains the 
The Benefits same year after year will deposit one-third of that 
of income each month in a savings bank that pays four 

Compound per cent, he will be able to retire at the end of 
Interest. thirty-five years, and thereafter he or his heirs 
will receive the full amount of his income. If he will steadily 
deposit a quarter of his income in the sam^e way he will be able 
to retire on full pay at the end of forty-one years. A fifth of his 
income, saved and deposited in this way, will enable him to stop 
work on full income saved at the end of forty-six years, while a 
deposit of one-tenth of his income will retire him at the end of 
sixty years. 

"To be able to retire on half income as a result of this kind of 
steady saving is easier. This can be achieved in twenty-four 
years by the deposit of one-third of the wages in a savings bank 
each month; in twenty-eight years by the deposit of one-fourth 
of the wages; in thirty-two years by the deposit of one-fifth of 
the income, and forty-five years by the steady saving of one-tenth 
of the wages. 

"What is the depositor to do if he needs a sum of m.oney urgent- 
ly just before an interest payment? There is a very simple way 
out of it and in the explanation is a helpful lesson. Let us as- 
sume that the depositor has put $1,000 on deposit in a savings 
Savings bank that pays four per cent interest, with payments 

Bank Book January 1, and July 1. His first interest date is 
may be used July 1, and this means that he will get $20 in in- 
as Collateral terest if his thousand dollars is still on deposit. 
i^ecuri y. j^^ emergency arises that makes it imperative for 
him to have $800 for twenty days on June 10. If he draws this 
out of the savings bank he will lose the interest on it for the six 
months. What is he to do? He can take his savings bank book 
to a commercial bank, use it as collateral, and borrow the 



INVESTMENTS 55 

Assume that he is charged six per cent interest on this money. 
This means that it will cost him about $2.60. 

Now, if he had drawn the $800 out of a savings bank he 
would have forfeited $16 in interest. This means that by fol- 
lowing the plan just outlined he paid only about $2.60 for the 
use of the money. Thus he not only practiced economy but 
maintained the integrity of his savings account. Therefore, it 
is important for the savings depositor to. know just when the 
interest payments in his bank are made, and not to withdraw 
money at times when the interest might be forfeited. This, 
combined with steady savings, is the only way to obtain the big 
benefits of compound interest." 

From Saturday Evening Post. 

Many people prefer the government's guarantee to repay 
their savings to that of banks. They deposit their savings in 
postal savings banks and receive interest from the government 
at the rate of 2% a year. When the deposit is $20 postal 

or more it may be exchanged in multiples of $20 for Savings 

Batiks 
24% government bonds. According to the govern- 
ment regulation an individual shall not have interest bearing 
deposits in excess of $1000. He may deposit larger amounts if 
he wants no interest upon them. No one may deposit less than 
$1 . 00 but for ten cents he may purchase a card upon which he 
may accumulate ten cent stamps until the whole amounts to 
one dollar. The card then may be exchanged for a savings 
certificate. Deposits may be made at any of the larger post 
offices. 

One of the most widely used means for the investment of 
money in small amounts is furnished by the life insurance com- 
panies. The life insurance company in return for Life 
the payment by the insured person of a fixed annual Insurance. 
sum called the premium, agrees to pay to the insured at the ex- 
piration of a certain number of years a definite sum of money. 
If the person insured dies before the time for the payment by 
the company is reached, the insurance company pays the agreed 
sum to another person called the beneficiary, named by the 
insured in the poHcy, or agreement by which the insurance is 
purchased. This form of life insurance is called Endowment 
endowment insurance and commonly is written for Policy. 
twenty year periods although it may be written for other periods. 



56 INVESTMENTS 

The endowment policy is not however the only form of life 
insurance which the companies issue. A person may buy a 
policy according to the terms of which he pays a fixed sum each 
year throughout his hfe, and at his death the amount named in 
the face of the policy is paid to the beneficiary. This form of 
policy is called the ordinary life or whole life policy. When the 
whole life policy is paid for by a fixed number of annual pay- 
ments it is called a limited payment policy. Still another form 
of insurance is that under the weekly insurance policy by which 
payments of a fixed sum, as ten or twenty-five cents, are made 
weekly to a collector of the insurance company. This form of 
policy is generally wTitten for amounts under five hundred dol- 
lars and is payable to the beneficiary at the death of the insured. 
Its prime object is to provide a sum sufficient to pay funeral 
expenses. 

The premiums for all forms of life insurance policies are 
determined by the companies by means of exact mathematical 
calculations. These calculations are based on tables which show 
the num.ber of people who die at various ages. These mortality 
Computa- tables are made up from records of the dates of birth 
tion of and death of large numbers of persons and owe their 

remiums. accuracy to the law of averages. While it is im- 
possible for an insurance company to tell at what time a particular 
individual will die, it can tell at approximately what time ten 
thousand persons will die. 

The premiums charged by life insurance companies and 
printed in their rate books vary slightly as do the privileges con- 
tained in their policies, but the differences are not important. 
Below are examples of insurance premiums as computed accord- 
ing to the mathematical tables above referred to. 

Twenty Year Endowment Policy for $1,000. 
Payable at Death or at the End of 20 Years. 



ige 


Rate 


Age 


Rate 


20 


43.55 


24 


43.77 


21 


43.60 


25 


43.83 


22 


43.66 


26 


43.90 


23 


43.71 


27 


43.98 



INVESTMENTS 57 

The purchaser of an insurance policy may have two objects 
in view. He may desire to provide a means by which his family 
or dependents are insured means of liveHhood if he should die 
or he may wish a convenient method of investing insurance 
his surplus earnings. To aid the person thus desiring as^Protec- 
to secure protection for his fam.ily the policies of • ^ 
insurance frequently provide that the face of the policy will be 
paid to the beneficiary in monthly payments beginning at the 
death of the insured. This provision may be in either an en- 
dowment or whole life policy and is called the monthly income 
feature. It has the advantage of relieving the beneficiary, who 
may not be familiar with business matters, from the task of in- 
vesting a large sum of money as would be the case if the payment 
was all made by the company in one sum. 

The endowment poHcy is particularly adapted to the person 
who desires a convenient method of investment and at the same 
time wishes to provide protection for his family. Endowment 
It practically compels a person to save a definite insurance 
sum each year as the premium comes to be consider- ^^nt!*'''^^^" 
ed as something which must be paid. His savings 
made by the purchase of an endowment policy and the payment 
of premiums thereon are invested by men whose business it is 
to know all about investments. Moreover the business and in- 
vestments of the company are carefully supervised and inspected 
by public officials. By the purchase of an endowment policy a 
young man or woman may, by regular annual payments, provide 
a substantial sum which will be available at the end of the en- 
dowment period either for investment in business or the purchase 
of a home or for any other purpose. In considering the value of 
an endowment policy it must not be forgotten that in addition to 
the lump sum which will be paid to the insured at the end of the 
period, the pohcy holder is also insured of the fact that the face 
value of the policy will be paid to his beneficiary should he die 
before the expiration of the endowment period. 

One of the most common forms of investment is buymg 
land and houses, i. e. real estate. This form of investment is 
desirable because of its comparative safety, the possibility of 



58 INVESTMENTS 

using the property as a home and the tendency of wisely selected 
property to increase in value. When one invests in real estate he 
must take into account the expense of maintaining the property- 
repairs, taxes, insurance, as well as its liability to depreciate in 

T> » T. ^ value. Real estate is often difficult to sell readily 

Real Estate. . . ,, , ,^^^ . , ^ . , , 

' at its lull value. When money is loaned with real 

estate as security the prudent lender limits the loan to about 60% 
of the value of the property. He receives a promissory note 
secured by a written document signed by the owner. This 
document is called a mortgage and it guarantees the payment of 
the note. If the conditions of the agreement are not met the 
creditor through a process of law may secure payment of the note 
with interest including the cost of suits and clerk's fees. If the 
mortgagor does not pay the sums ordered by the court the mort- 
gaged property may be turned over to the mortgagee to satisfy 
the debts. The owner also guarantees to keep the buildings 
insured and in repair, to pay taxes when due, etc. 

Frequently two or three men desire to invest money in a 
small business enterprise. In such cases they usually form a 
partnership and share their gains and losses according to the 
amounts they invest. If one man invests SI 000 and another 
invests $2000 the first owns 1-3 of the property hence he shares 
1-3 of the profits or 1-3 of the losses while the second man shares 
2-3 of the gains or losses. In case of failure each partner 
becomes responsible for the entire debt of the firm after the firm 
A Partner- assets have been exhausted no matter how small his 
ship. interest may be. In a partnership the evidence of 

ownership is contained in the partnership agreement. The men 
who actually conduct the business and share in the profits are 
called real partners. Sometimes members of the firm are not 
publicly known and take no part in the management of the 
business. Such members are known as silent or dormant partners. 

The money, merchandise, buildings, land, equipment, etc., 

invested in a commercial enterprise is called the capital. If a 

large capital is required or many partners are interested in the 

„ .^ , business a partnership is not desirable. In such a 

Capital. ,^ ^. . , , . , , 

case a stock company is organized and incorporated 



INVESTMENTS 69 

according to the laws of the state. It will be seen later that the 
advantages of a corporation are : 

1. Each stockholder is financially responsible for the par 
value of his stock and no more. 

2. Stock is easily transferred and bookkeeping incident 
to computation of dividends and transfers is simplified. 

3. Small investors are enabled to participate Advantages 
in great business enterprises. of aCorpor- 

4. It makes possible a great expansion in ^ ^^^' 
capital and organization. 

5. An opportunity is afforded for one to acquire an interest 
in a business where he would not be quahfied to assume direct 
control. 

6. The firm name may be perpetuated and the benefits 
derived which come from its established reputation. 

7. One of the main reasons why a corporation is more 
desirable than a partnership is that in a partnership the death of 
any partner dissolves the firm. 

8. It affords an easy method for borrowing m.oney for the 
extension of the business. 

The following procedure is necessary in the organization of 
a stock company: (1) Three or more men in a community 
come together and decide to organize a corporation for carrying 
on a business such as a creamery. (2) These men solicit sub- 
scriptions for the stock, i. e. they seek to interest other men in 
investing money in the business. These investors are called 
stockholders. They agree to buy a certain number jj^^ ^ stock 
of shares of the stock. (3) It is decided that a Company is 
certain amount of money is needed to be used in ^s^^*^® 
erecting and equipping a plant and for operating the plant. This 
is called the capital stock. Three or more persons agree to buy 
and actually pay for 50% or more of the proposed capital stock. 
When the stock is paid for, the purchaser receives a stock certi- 
ficate showing the amount of the capital stock, the par value of 
each share and the number of shares owned. (4) All the sub- 
scribers are then called together for the purpose of forming a 
permanent organization. At this meeting articles of association 



60 INVESTMENTS 

are drawn up, blanks being furnished by the Secretary of State. 
These articles of association give the name of the company, its 
purpose, the location of the principal office of the company, the 
amount of the capital stock, the number of shares and the names 
and addresses of the subscribers. If a cooperative company is 
formed in Vermont special articles of association are required. 
(5) When a copy of the articles of association and a certificate 
of paid up capital are filed with the Secretary of State he issues 
a charter to the corporation showing that it is legally organized 
and ready for business. (6) The corporation is managed by 
not less than three directors who are elected for one year by the 
stockholders. The directors elect officers from their number and 
the organization is complete. 

The directors elect a manager and provide the necessary 
Par Value equipment. If all of the stock has not been sold it 
is usually may be disposed of at the value originally agreed 
$100 a Share ^^^^ usually $100 a share. This is the value of 
each share as recorded on the books of the company and is known 
as the par value. 

After the enterprise has been in operation for a year there 
may be profits in excess of the cost of operation. These profits 

are to be divided among the stockholders or to be 
Computed carried to the surplus account. Let us assume that 
on the Par the capital stock is S10,000 and the profits are $1000. 

There has been a gain of 10% and each stockholder 
will receive as his share of the profit 10% of the par value of the 
stock that he owns. Suppose a man owns 5 shares at a par value 
of $100 a share or a total value of $500, he would receive as his 
share of the profit 10% of $500 or $50. Cooperative corporations 
in Vermont must ''set aside annually not less than 10% of the 
net profits of the corporation for a reserve fund until there is 
accumulated a fund of not less than 30% of the paid up capital 

stock." When the creamery has been in operation 

Value of several years and the reserve fund is fully paid up 

Stock lY^Q business may have developed until there will be 

^^*^^* a net profit of $2500 or 25% of the capital stock. 



INVESTMENTS 61 

The actual value of each share is the original value of the share 
($100) plus the reserve fund ($30). In addition to this the fact 
that a dividend of 25% is declared increases the value of the share. 
Investors are glad to receive 8% or 10% on their money. They 
would be more than willing to pay $250 for a share of stock which 
pays an annual dividend of $25 (25%^ on the par value of $100). 
This price which the share would bring if offered for sale on the 
market is called the market value of the share. The market 
value varies as the prosperity of the business varies but the par 
value does not change and upon it the percent of profit is always 
computed. It is seen that while a dividend of 25% is declared 
on the par value of the stock a man who pays $250 for a share of 
stock is receiving only 10%, on his investment. 

In this discussion of dividends we have assumed that there 
is no stock upon which a certain rate of interest is guaranteed. In 
some instances a part of the stock is sold with the guarantee that 
a definite rate of interest will be paid. When the ^ Definite 
corporation has been in existence for some time and R^^t^^^/^ ^'" 
there is a desire to increase the size of the plant or to Guaranteed 
make improvements in it, additional stock is fre- g^^^^^^^^^^^ 
quently offered for sale which does not share in the 
profits but upon which the corporation agrees to pay a certain 
rate of interest. Such stock is called preferred stock and interest 
upon it must be paid before there is any division of profits. It 
is frequently the case that a larger rate of interest is paid on 
common stock. Suppose our creamery company decides to buy 
additional ground and increase the size of the plant at an ex- 
penditure of $1200. They may issue 10 shares of preferred stock 
with a par value of $100 a share but which they can sell for $120 
a share because they agree to pay 6% interest. Let us assume 
that our creamery makes a profit this year of $1560. They must 
first pay the 6% interest on the $1000 of preferred stock or $60. 
This leaves $1500 to be distributed among the common stock- 
holders the par value of whose stock is $10,000. Since $1500 is 
15% of $10,000 a dividend of 15% is declared on the common 
stock. A man who owns one share of preferred stock receives 
$6 interest because he receives 6% of $100, the par value of the 



62 INVESTMENTS 

share. He actually paid $120 for the share and since he receives 
$6 on an investment of S120 he receives only 5% on the money 
invested. 

If a stockholder desires to dispose of a part or all of his stock 
Transfer of in a small, purely local company like the one we 
Stock in have described he is usually able to find a buyer. 
panics is In this case he indicates in the space provided on 
Simple. ^]^g stock certificate that the stock has been trans- 

ferred. The certificate may be taken up by the secretary of the 
company and a new one issued in its place to the new owner. 

The transfer of stock in a large corporation like a railroad 
is a much less simple matter. Sales of stock in such corporations 
The Stock are- naturally made in the larger cities, in many of 
an^A^socia*-^ which there are associations of business men for the 
tionofBro- purpose of facilitating the transfer of shares of 
Purpose of ^ stocks and bonds. One of the most notable of these 
Facilitating associations is the New York Stock Exchange in 
f e/of ^'^Ust- ^^^^^ Street. It is an association of men called 
ed Stock." brokers who buy and sell stocks and bonds. The 
building in which they meet for the purpose of making these 
transactions is also know^n as the Stock Exchange. In order that 
these exchanges might become stable they found it advisable to 
list for sale stock which had proved value. Before a company's 
stock can be listed the officials of the exchange must be satisfied 
that it has a paid-up capital, that it is in good financial condition, 
and that it is a legitimate enterprise. In many instances very 
undesirable stock is 'listed stock" but this is due to a decline 
in its value after it was first admitted to the exchange. 

Only members of the stock exchange are permitted to buy 
The Price ^^^ ^^^^ stock on its floor. The membership is 
of a Mem- limited to the number who can easily care for its 
the^ Stock business hence the price of a membership or a seat 
Exchange is in the exchange is very high. The lowest price in 
*^ * many years in the New York Stock Exchange was 

$20,000 and the highest, in 1905 and 1906, was $96,000. These 
seats can not be purchased outright. The man must be elected 
to membership by the members. 



INVESTMENTS 63 

The daily Stock Exchange value of stocks and bonds may 
be found by consulting the daily papers. There are so many 
conditions aside from the real value of the securities which enter 
into the determination of the stock quotations in daily papers 
that they give little actual information concerning the value of 
the stocks and bonds as conservative investments. Judging an 
If one wishes to determine the real value of securities Investment. 
the Investment Bankers Association of America recommends that 
he secure the following information: 

''What constitutes the property? Is it actually built? 
Where is it located? What is real appraisal value of property 
by competent, intelligent appraiser, audited by certified public 
accountants? W^hat is value of property for the purpose of 
operation? Is property in operation? If so, how long has it 
proved successful? What is output? Does company own or 
lease property? 

''What are actual earnings as audited by certified public 
accountant? What are detailed earnings over a period of years? 
Are earnings estimated instead of actual? If estimated, by 
whom? Estimated should not be vague, but should be definite 
and calculated on some basis, else they are value- E^rnin^s 
less. They should not be made essentially on the 
basis of earnings of other very prosperous companies in the same 
line of business, for different managements will not operate with 
equal success? 

"Is the goodwill all in prospect, or has it been valued on 
definite earning power? Goodwill should not be valued pri- 
marily on the earnings or goodwill of other sue- ^_. .„ 

r 1 • • ,1^ ^ 1- c ^ ' Goodwill. 

cessiul companies m the same Ime oi busmess. 

"What dividend or interest is paid on securities offered? 
If income is being paid or promised, who has audited the books 
of the company? The payment of the dividend Investment 
implies that it has been earned. Grave harm can Income. 
be done by representing securities as dividend payers when pay- 
ments are made from capital. 

"Securities of dangerously financed companies are generally 
offered in small par value so as to appeal to people of small 
means. This is especially true in the sale of stock. If the par 
value of the securities oifered is $10 or less, an in- Price of 
vestigation is desirable; if it is below $1, this in- Securities. 
vestigation is imperative. It is bad practice to offer securities 
for sale with a statement that the price will be advanced on a 



64 INVESTMENTS 

certain day. This statement implies that the value has increased 
to the extent of the increase in price; as a matter of fact, the in- 
crease in price may not mean this, and usually it is only a plaus- 
ible selling scheme. One good test of this is to ascertain at what 
price the advertiser will buy back the same stock he is offering. 

''Any statements mentioning figures should be susceptible 
of proof through an income account and balance sheet, audited 
by a certified public accountant. These two accounts should be 
given as of one date, because it is possible to cover up inaccuracies 
if the balance sheet is given on a date different from that of the 
income account. Any company offering securities for sale which 
will not, if requested, submit an income account and balance 
sheet subjects itself to the suspicion of fraudulent practice. The 
financial statement of a company should be as of the date on 
which the securities will be outstanding, and the balance sheet 
Financial should, therefore, show the securities as liabilities. 
Statements. From these statements can be calculated the tangible 
net assets per share of stock of the value of property securing 
bonds. If these figures fall materially below the selling price of 
the securities, the risk is considerable, and requires a detailed 
explanation. Great care should be taken that the promoter 
does not glibly promise future growth to explain away any dis- 
crepancy, or represent that goodwill is of sufficient value to take 
care of it. Where a company is showing real earnings with very 
little property, it is, of course, legitimate to capitalize these 
earnings to a reasonable extent." 

The ordinary investor has little occasion to use the stock 
exchange. Most investments made through the exchange are 
Brokerage speculative in their nature. When stock is pur- 
rvi^^^ ?h chased through a broker he will charge a fee of 
a Broker (usually) 12 J cents or $1-8 a share. This fee is 
for buying called brokerage. If a share is quoted at 89 it 
Stocks and means that the market value is $89 a share but if 
Bonds. yQ^ should purchase it through a broker it would 

cost you $89 1-8 a share. If you sell your stock through a broker 
he will deduct his fee or commission or brokerage from the amount 
he receives so if you sell stock at 89 you will receive all of this 
amount except $1-8 which the broker retains or you will receive 
$88 7-8 a share. The amount a broker may charge for buying 
or selling for others is regulated by the rules of the exchange hence 
is uniform. In reading of the stock exchange one frequently 



INVESTMENTS 65 

reads of the operations of the ''bulls" and ''bears'\ The ''bulls" 
are men who buy stock because they expect to sell in the future 
at a higher price and are so called because of the tendency of a 
bull to elevate everything with which he comes in *'Bulls and 
contact. The "bears" sell because they expect Bears." 
prices to decline in the future. 

There is much stock bought and sold which is not listed in 
the Stock Exchange. Such buying usually takes *'Curb" 
place on the sidewalk near the Stock Exchange and Trading, 
is known as "curb" trading. 

The newspaper quotations are inserted in order that pupils 
may learn how to read them. They may be used as the basis for 
problem material. 

NEW YORK STOCK MARKET. 
Saturday, December 22 

The following is a summary of today's transactions on the 
New York Stock Exchange to 12M: 

STOCKS. 

Opening High Low Dec.22 Dec.21 

Alaska Gold li 1| H U ^ 

Alaska Jun. Gold 1^ H H H ^ 

Am. Can 34f 34| 34 34 34i 

Am. Can. pf 87 87i 87 87i 86 

Am. Car. & F'dry 63 63i 62| 62 62i 

Am. LocomoVe 491 49i 49 49 49 

Am. Sm. S. pf(A) 90i 90i 90J 90 90 

Am. Sug. Ref. pf 106 106 106 106 105i 

Am. Tel. & Tel 99i 99i 99 99 98| 

Bait. & Ohio 41 41 40i 40i 40i 

Bait. & Ohio pf 50J 50|- 50i 50 5Ci 

Bethlehem St'l 69* 69i 68* 68i 69 

Beth. St'l pf. ret 94i 94f 94f 94 94 

Beth. Steel(B) 69i 69| 68f 69 69^ 

Canadian Pac 129* 129* 129* 129i 129| 

Chi., R. I. & P. 6% 36| 36i 36f 36i 36i 

Ch. R. I. &P. 7% 45 45 45 44i 44* 

Erie 13| 13| 13i 13f 13| 

Erie 1st pf m m 19i 19| 19* 



66 



INVESTMENTS 



Opening 

Gen. Electric 123 

Interboro Con 6 

Interboro C. pf 41 

Intern'! Paper 23i 

Int. Paper pf . sta 54 

Lehigh Valley 52 

Liggett & My 161 

Maxwell Motor 21| 

Miami Copper 25f 

Nat. Biscuit 90 

N. Y. Air Brake 114 

N. Y. Central GSJ 

N. Y., N. H. &H 27i 

Ohio Cities Gas 33| 

Pullman 109^ 

R. Iron & Steel 74} 

R. I. & Steel pf 90i 

Sears Roebuck 128 

Western Union 79 





^^Closing Bid._^ 


High Low Dec.22 Dec.2l 


123 


122* 


122* 


122 


6 


6 


6 


6 


41 


41 


41 


41 


23i 


23* 


23 


23} 


54 


54 


54 


53* 


52 


52 


52 


52 


161 


161 


161 


155 


m 


21i 


21* 


21f 


26 


25f 


25f 


25f 


90 


90 


89 


89 


114 


llOt 


110 


113 


63i 


63} 


63} 


63* 


27} 


27} 


27* 


27* 


33^ 


33i 


33} 


33* 


109i 


109* 




108* 


74} 


74 


73f 


73^ 


90i 


90 


89i 


90? 


128 


128 


127 


127* 


79i 


79 


78* 


78} 



NEW YORK CURB PRICES 

Saturday — Close. 

Bid. Asked. 

Aetna Explosives 7^ 7} 

do. Certificates 8 

Big Ledge li . If 

Boston & Montana 37c 39c 

Butte Copper & Zinc 6} 6* 

Butte Detroit -^ } 

Calumet & Jerome yf 1 

Canada Copper l-f l-J-g- 

Jumbo Extension 12c 14c 

If a man who owns a farm or other property is in need of 

Bonds are money he may borrow 60% of its value, give a 
Classified f "[ . '"^ ,, ' % ,, 

According promissory note and secure the payment ot the 

to the Kind hqIq by giving a mortgage on his property. Similar- 
as Mortgage ly, if a corporation desires to borrow funds for the 

Bonds and promotion of its business it may give notes secured 

Debenture I ^ .. xi, T r xi 

Bonds. ^^ by mortgages or hens on the assets oi the company 

or a part of its assets or it may give promissory notes under the 



INVESTMENTS 67 

seal of the company. The^e notes are usually of $100 denomi- 
nation and are called bonds. If secured by mort« interest is 
gage they are called mortgage bonds, otherwise P^M^^^^ 
they are called debenture bonds. Just as the 
man who mortgages his farm must pay interest to the man 
from whom he borrows the money, [the corporation- must pay 
interest to the man from whom it borrows money and to 
whom it gives a bond as evidence of the loan. 

In order to facilitate the collection of interest some bonds 
nave small interest certificates attached. These certificates or 
small notes specify the time when certain amounts of interest 
are due and upon or after that date they may be cutoff the bond 
and presented for payment. Usually any bank will cash these 
certificates, called coupons, for its customers. 
Bonds bearing coupons are called coupon bonds. Coupon 
Government bonds are often issued without interest R^g^tered 
coupons. They are made out and registered in the Bonds. 
name of the owner and are payable to him or his 
assigns. These bonds are called registered bonds and the inter- 
est is sent to the registered owner or to his attorney as it becomes 
due. 

Bonds and stocks are bought and sold in the market in 

exactly the same way. 

News Paper Quotations of bonds for December 22, 1917: 

Railroad and Other Bonds. 

High Low 

Baltimore & Ohio 5s 74 74 

Bethlehem Steel 5s. 1936 77 76f 

Bethlehem Steel funding 5s &7 87 

Brooklyn Rapid Transit 5s. 1918 91 91 

Central Pacific 1st 4s 78 78 

Chesapeake & Ohio conv. 4|s €6 66 

Chesapeake & Ohio cv. 5s. 1946 73 72§ 

Chicago & West Indiana 4s 64 64 

It will be observed from the bond quotations given above 
that certain abbreviations are used. Bethlehem Steel 5s. 1936 
are bonds bearing 5% interest issued by the Bethlehem Steel Co. 



68 INVESTMENTS 

and due in 1936. Central Pacific 1st 4s are bonds bearing 4% 
interest, secured by a first mortgage, issued by the Central 
Abbrevia- Pacific Railroad. The high and low prices for the 
tions are ^g^y ^j.^ quoted. Chesapeake & Ohio cv 5s 1946 
Bond Quo- $100 bonds were bought for $72i or including the 
tations. brokerage $72f. The highest price of these 

bonds during the day was $73, with brokerage $73|. If one 
buys a 4% bond at $73| he receives 5% on his investment. 
The variation in the market price of bonds is due to causes similar 
to those which affect the price of stocks. 

Corporation bonds have ahvays been popular. They afford 

an opportunity for the corporation to borrow money without 

giving outsiders a vote in the management of the 

Bonds are business. As an investment they are popular 

Often Good because of the certainty of the income. Of course 
Investment. . it, , / , , .» , 

bonds like stock may be worthless if the company 

has no assets but if the company has assets its first obhgations 

are to the bondholders who are preferred creditors. The interest 

on bonds must be paid before dividends can be paid on either 

preferred or common stock. The bonds pay a small rate of 

interest as a rule but a company is indeed in a bad state of 

affairs if it can not pay interest on its bonds. 

In addition to the corporation bonds, the kind we have con- 
sidered thus far, there are bonds issued by states, counties, 
towns, etc. These bonds are issued for the purpose of financing 

. . , public improvements and are considered the highest 
Municipal . 

and Govern- grade of security and the safest possible investment 

ment Bonds j^g^t to government bonds. We are most interested 

make very ° . . 

Desirable at the present time m government bonds. When 

Invest- Q^p government desires to undertake some large 

public work like the building of the Panama Canal 

it borrows money from the people and issues them interest bearing 

bonds. In the newspaper quotation of government bonds for 

December 22, 1917 given below, the Panama Canal 2s 1938 are 

bonds issued by the United States Government for financing the 

Panama Canal. They bear 2% interest and are due in 1938. 



INVESTMENTS 6^ 

On December 22, 1917 $96 ($4 below par) was bid for a $100 
Panama Canal bond. 

Government Bonds. 

Saturday, December 22, 1917. 

Dec. 22 Dec. 21 

Close Close 

Bid Asked Bid Asked 

Registered 2s 1930 96i 97* 96i 97i 

coupon 96 J .... 96i .... 

Registered 3s 1908-18 99 99f 99 99f 

coupon 99 99i 99 99f 

Registered 3s 1946 80 .... 80 

coupon 80 .... 80 .... 

Registered 4s 1925 103i 105 103i 105 

coupon 9 I03f 105 103f 105 

Panama Canal 2s 1936 96 ... 96 

Panama Canal 2s 1938 96 .... 96 

Panama Canal 3s 1961 80 .... 80 

In meeting the enormous cost of our war, Congress may tax 

us directly or the government may borrow money from us and 

give us as security government bonds upon which J/^^ Govern- 

interest is paid. As a rule national government ment Bond 

bonds are the safest of investments and for that ^^P^^f^^ 

T , upon tiie 

reason pay a low rate of interest. The safety,^of;^a ^Stability of 
government bond depends upon the stabiUty of the ^ ^ rn- 
government. At the present time (December, 1917) ment. 
one would scarcely care to invest in bonds issued by the Bolsheviki 
government of Russia. 

The following clippings from the ''Official Bulletin" published 
by the National Committee of Public Information give first hand 
information concerning the safety of government Liberty Bonds: 

GOVERNMENT BONDS RANK HIGHEST OF ALL SECURITIES. 

In connection with the liberty-loan campaign, the publicity 
department explains that, in a very general way, bonds are 
divided into five different classes: 

1. Government. — ^A Government bond is issued by the 
National Government. It is secured by the wealth and taxing 



70 INVESTMENTS 

power of the country issuing the bond and is issued to provide 
funds for the maintenance of the Government, to equip the army 
Government and navy, build waterways and public works of all 

Bonds Rank gorts, and in timios of war to provide for increased 
Highest - ' 

^of all needs. 

Security. 2. Mu7iicipaL — A municipal bond is issued by 

a city, town, or village. These bonds are issued to get money 
for building schoolhouses, waterworks, sidewalks, fire-depart- 
ment stations, or other public improvements voted by the muni- 
cipality. 

3. Railroad. — ^Railroad bonds are subdivided into too many 
classes to be gone into briefly. They are issued by a railroad 
company to build new lines, buy cars and engines, and to keep 
the roads in good condition. 

4. Public utility. — Public utility bonds are issued by cor- 
porations owning and maintaining public-service utilities — gas, 
electric light, street railways, and other such service required by 
the public and not owned by the city in which they are located. 

5. Industrial. — Industrial bonds are issued, as the name 
implies, by corporations manufacturing on a large scale various 
sorts of products. Under this class come the bonds of steel 
companies and other big industries. 

Necessity requires a briefness which does not permit further 
subdivisions of these five headings. Government bonds as a 
class rank highest in market value. The bonds of our Govern- 
ment have a higher rank than those of any other country be- 
cause the credit of the United States is now the highest of all 
civilized countries. 

HOW THE UNITED STATES LIBERTY BONDS MEET ALL 
THE ESSENTIALS OF A GOOD INVESTMENT. 

The publicity bureau of the second Liberty loan, Treasury 
Department, authorizes the following concerning the bond issue: 

1. Security of principal. — The wealth of the United States 
is back of the bonds issued by the Government. Since the present 
organization of the United States in 1790 no debts have ever 



INVESTMENTS 71 

been repudiated. The money borrowed has always been re- 
paid. The United States has the lowest per capita debt of any 
great nation. 

2. Security of income. — The return upon the How the 
principal invested is the income or interest. The United 
interest on these bonds is a part of the Govern- erty Bonds 
ment's expense. Should the power of our Govern- 5^eet all the 
ment fail, not even cash would be of value, so high is of a Good 
our standing. Investment. 

3. Fair income return. — Four per cent for such high-grade 
security is a fair return. But in addition these bonds bear the 
privilege of convertibility into a higher rate of interest if the 
Government has to borrow more money at a higher rate. 

4. Marketability. — The United States bonds are very active 
in the open market. Those offered for sale find a purchaser 
more quickly than any other securities. Bond houses and banks 
handle them as readily as cash. These bonds can be sold at any 
time and in any bank or trust company throughout this entire 
country. 

5. Value as collateral. — They have the greatest value as 
collateral of any security, because the credit of the United States 
Government is the highest of any Nation. Banks or individuals 
will readily loan money on such security. 

6. Tax exemption. — The Government bonds of the second 
Liberty loan are exempt as to principal and interest from all 
taxation by the United States, any State or any of the possessions 
of the United States, or by any local taxing authority, except 
(a) estate or inheritance taxes, and (b) United States graduated 
additional incomie taxes, commonly known as surtaxes, and 
excess profits and war profits taxes. The interest on an amount 
of bonds and certificates authorized by said act, the principal 
of which does not exceed in the aggregate $5,000, owned by any 
individual, partnership, association, or corporation, shall be 
exempt from the taxes provided for in clause (b) above. 

7. Freedom, from care. — Bonds can be registered in the name 
of the holder and the interest thereon will be sent them every six 
months direct from the Government. 



72 INVESTMENTS 

8. Acceptable duration. — The period of time over which a 
loan continues is in the case of the Liberty loan bonds of great 
advantage. If bought by a young person the repayment will 
probably be made within his or her lifetime; if by an older person, 
the money will be repaid to his or her heirs. 

9. Acceptable denomination. — These bonds are issued in 
denominations of $50, SlOO, $500, $1,000, and m_ultiples of 
$1,000; therefore they meet the requirements of small and large 
investors. 

10. Potential appreciation. — There is every reason to be- 
lieve that these bonds will increase in value after the war is over, 
to judge by the fact that in the past war bonds did increase in 
value at the close of the Vvar. In the event of the war ending 
within a short tim.e these bonds would increase in value be- 
cause of certain tax exemptions. Therefore people of wealth 
will want to invest in them and small holders will probably be 
able to sell at a profit. In the event of the continuation of the 
war over a long period a higher rate of interest will have to be 
paid, and this maintains the value of the bond. 

BONDS, COUPON AND REGISTERED. 

Technically a bond is a promise to pay. A person buys a 
bond; that is, he lends his money to an organization and in return 
he receives an engraved paper receipt called a bond. Apart of 
this bond bears the terms of the loan. It states that $50, $100, 
$500, $1000 or m.ore has been borrowed from the buyer of the 
Bonds Cou- bond for a stated period of years at a certain rate 
pon and of interest, this interest to be paid on dates stated 
egistere . -^ ^j^^ bond. The interest is usually paid twice a 
year. Attached to the bond are the coupons. These represent 
the interest. Beginning with the first date on which interest is 
due, these bear the date and the amount of money to be paid. 
If the bond was issued June 15, 1917, for $100 at 3| per cent, the 
first coupon would state that on December 15, 1917, $1 . 75 would 
be paid to the bearer. This coupon could be deposited or cashed 
at any bank. 



INVESTMENTS 73 

If a bond is registered the owner receives a receipt for his 
money, the bond is held by the organization issuing it, and the 
interest is paid to the owner by check. Coupon bonds are pay- 
able to bearer and should be kept in a safe deposit box because 
they are almost the sam.e as cash. The registering of a bond 
relieves the owner of the responsibility of taking care of it; 
though he must take care of his receipt. 

LIBERTY BONDS PREFERRED STOCK. 

Likening the United States to a great corporation with more 
than a hundred million stockholders and with capital stock and 
resources of m.ore than $250,000,000,000 and an annual income of 
$50,000,000,000, each American citizen is a stockholder in this 
great corporation. Even those whose only assets Liberty 
are their earning capacity own shares in our public f^^J^^^^« |/^^Jj^ 
domain and property and are working on a profit- 
sharing basis, with a vote and a voice in the management of the 
corporation and with the right to acquire m.ore stock at any time. 
A Liberty Loan Bond may be hkened to a share of pre- 
ferred stock in this gigantic corporation. Like preferred stock 
in other corporations, it may not return, at times, so large a 
dividend as common stock, but the dividend from it is certain 
and sure. It is stock that pays 4 per cent dividend, and while 
in some years crop failures may decrease the farmer's dividend 
from his land to less than nothing and various causes may lessen 
or destroy dividends from all other sorts of property, the divi- 
dend from the Liberty Loan Bond is certain and sure, subject to 

no failure. 

The owner of a Liberty Loan Bond holds written tangible 
evidence of being a preferred stockholder in the United States, 
the greatest, the most glorious, the m.ost honorable, and the most 
successful corporation in the world. He holds the certificate 
of being a citizen wilHng to support his Government and to lend 
money to his country when it needs and calls for it. 



OUR OPPORTUNITY— W. S. S. 

In the preceding chapters we have learned how the great 
war came to America; something of what America's part is to be 
in keeping alight the fires of liberty for the future generations, 
and in preserving our Christian civilization victorious over a 
culture founded on brute force and dedicated to the exaltation 
of an earthly prince. What is required of us in man strength and 
what is being done in the actual raising, preparation and training 
of an army and navy has been referred to; the tremendous task 
of supplying and equipping not only our own forces but those of 
our allies has been touched upon; and brief reference has been 
made to the humane work of relief so nobly performxed by the 
Red Cross and other agencies. The miere money cost of it all, 
the staggering totals of millions, of billions, has brought home 
again to us the hugeness of the task that lies ahead • and has 
brought to us strongly the lesson that by thrift alone can these 
material requirements be m.et. Reference has been made to the 
peace time power of thrift and to the ordinary investments open 
to man for the laying by of their surplus earnings. And now 
remains the task of applying the lessons of thrift to the work 
before us. For the government has made it possible for each 
one of us, each individual man and woman, each boy and girl 
in the United States to aid effectively in the prosecution of our 
war upon the German Imperial Government. Congress has pro- 
vided that there shall be loaned to the government the sum of 

Tr j^i. two billion dollars. This money is to be loaned bv 
Vandethp 1,1 r ^ 

on War the people through the purchase by them of war 

Savings savings stamps. In an interview printed in the 

Saturday Evening Post, Frank A. Vanderlip. chair- 
man of the War Savings Committee, describes the war savings 
stamps as follows: 

'They are designed to give every man, woman and child 
in the United States the opportunity to aid the Governmient 
in financing the war. The unit is five dollars; but instead of 
leaning the Goveiiiment five dollars and getting a semi-annual 
interest'- return of ten cents a much better plan has been de- 
vised for the ^mall investor: Beginning December 1, 1917, the 



OUR OPPORTUNITY— W. S. S. 75 

Government will offer a war-savings-certificate stamp, which 
it vdil sell in December, 1917, and in January, 1918, for $4.12. 
This obligation is in effect the Government's note for five dol- 
lars, falling due January 1, 1923; and the buyer who, during 
the coming December or January, purchases for $4.12 one of 
these five-dollar war-savings certificates is virtually discount- 
ing the Government's note for five dollars — discounting it at 
four per cent interest, compounded quarterly. In other words, 
Uncle Sam says to the citizen: Tend me $4.12, Uncle Sam 
and in return I will give you a stamp which is my and the 
promxise to pay. I will use your $4.12 to prosecute Citizen. 
the war and meet the expenses of Government, and will pay 
you four per cent interest, compounded quarterly. Thus, 
when January 1, 1923 rolls round, I will hand you back the 
money you helped me out with, plus the interest; so that — speak- 
ing approximately, and ignoring, in our liberal American way, 
the few odd cents — for every four dollars you lend me now, 
w^hen I need it, I'll give you back five dollars five years hence.' 

'''But,' we can imagine the citizen saying to Uncle Sam, 
'don't you want me to lend you more than $4 . 12?' 

" 'Of course I do!' says Uncle Sam. 'I want you to let me 
have all you can spare throughout the coming year.' 

" 'Indeed I will!' says the citizen. 'I can let you have 
$4.12 in Decem^ber, 1917; $4.12 more in January, 1918; $4.12 
more in February, and — ' 

" 'No,' says Uncle Sam; '$4.12 is all right for December 
and January, but on the first of every month after January I 
shall have to raise the price of the stamps one cent. They 
will cost you $4. 13 each during February, $4. 14 during March, 
$4.15 during April, and so on.' 

" 'There's only one question that troubles me,' says the 
citizen; 'I don't quite like the idea of tying up my savings for 
five years. Suppose I need some of this money between now 
and January 1, 1923?' 

" 'That's all looked after,' says Uncle Sam. 'In the event 
of your having to use the money which you will have loaned me 
you can go to any post office and get back the amount you have 
paid, plus one cent a month, for each stamp you have bought. 
I'll only ask you to give the post office ten days' notice so that 
funds may always be on hand to meet any demands made. 
Aside from this, you are free, if it becomes necessary, to draw 
your money from any one of my ten thousand money-order 
post offices.' " 



76 OUR OPPORTUNITY— W. S. S. 

If a person has not at hand the money to buy a savings 
stamp he may purchase thrift stamps. These stamps cost 
Thrift twenty - five cents each. With the purchase of 

Stamps. ii^Q gj.g^ thrift stamp he receives a thrift card on 

which are sixteen spaces for affixing the twenty-five cent thrift 
stamps. When by the purchase of additional thrift stamps he 
has his card filled out at a total cost of four dollars he may take 
it to a post office and exchange it for a war savings stamp. For 
this stamp he gives his thrift card and an additional amount 
representing the difference between the current value of the 
savings stamps and four dollars, the value of the thrift card 
filled out. In January 1918 this difference is twelve cents, in 
February thirteen cents, in March fourteen cents and so on. 

It must not be forgotten that an investment in a war savings 
An Abso- stamp is absolutely safe. It can be taken to a post 
lutely Safe office and registered and if one loses it he will then 
be given a duplicate. Its value is constantly in- 
creasing and is printed on the face. It is the only government 
security which the law^ says shall positively increase in value. 

While we say that the government needs our money it might 
better be said that the government needs the things our money 
will buy. For this there are two essentials, it must have the 
money and we must not buy the things the government w^ants. 
Every time we spend money for a purpose not necessary for goods 
or service, we are compelling the government to compete with 
us. If laborers and manufacturers are busy supplying our needs, 
the needs of our soldiers must be neglected. We must not pur- 
chase what we do not absolutely need. With the money thus 
saved we can buy thrift stamps and war savings stamps and thus 
twice serve our country. 

Boys and girls of Vermont: 

The United States is at war. At war with an enemy 
ruthless, relentless and merciless. An enemy who will 
fight to the utmost, disregarding all neutral rights, 
mindful of no feelings of humanity. Its every re- 



OUR OPPORTUNITY— W. S. S. 77 

source must be exhausted, its last man drawn into 
the swirling vortex of war, the ultimate strength 
of each human unit made to yield to a superior force, 
the only god the imperial German government knows, 
before peace will come. 

Upon such an undertaking has our nation entered. 
The ultimate victory must be ours, but it will not be ours 
until by sacrifice we shall gain the right to be called vic- 
tors. Money and material are but the least that must 
be given. The blood of our best young men, the promise 
of American life, must freely flow on the fair fields of 
France ere democracy, through the supreme sacrifice, is 
made secure. 

You have learned how the war came to America, why 
America fights, the real problems of raising an army and 
navy, of manufacturing and furnishing them supplies 
and of helping supply our allies, of building a fleet of 
merchant and transport ships sufficient to balance the toll 
of the deadly submarine, of producing and conserving 
sufficient food to insure that not only our allies but we 
ourselves may be kept free from the pangs of hunger and 
threatening starvation. How the mere money cost of it 
all must be met by each individual's saving, thrift and 
doing without has been explained in the account of the 
war savings stamps and thrift stamps by means of which 
every man and woman, boy and girl may become a real 
enemy of the German kaiser, an actual defender of Am- 
erican liberty and American right, a fighter in the cause 
of democracy. 

Never before in the history of our country or of any 
country has there been offered to every citizen, even our 
school boys and girls, an opportunity such as is now laid 
before you. Yours is the privilege of practicing the home- 
ly virtue of thrift, of doing without the unessential things, 
of saving your nickels and your dimes for the purchase of 
war savings stamps. By your sacrifice our armies can be 



78 OUR OPPORTUNITY— W. S. S. 

equipped and the forces of our allies supplied. In the 
victory that must be ours you will have nobly done your 
share. 

Boys and girls of Vermont, sons and daughters of 
a state that has never yet failed our nation in time of need, 
lead on to victory! 



A TEACHING PLAN 



MAIN PROBLEM. 

Does a Vermont boy or girl who invests his savings in gov- 
ernment savings stamps and bonds show good business judg- 
ment as well as a keen sense of patriotic duty? 

(A) As a Patriotic Duty 
Minor Problems 

1. What is America fighting for? 

2. How are our government's war needs sup- 
plied? 

3. Our personal responsibility and opportunity. 

(B) As an Investment 
Minor Problems 

1. What opportunities has one with a limited 
income in our communit}^ to make investments? 

2. How may we determine the value of an in- 
vestment? 

3. How does the purchase of government sav- 
ings stamps and bonds compare with other 
available investments? 



(A) As a Patriotic Duty 
Minor Problem num^ber 1. What is Am^erica fighting for? 

1. Reasons assigned by Congress when war was 
declared. 

2. Our war aims: (a) As stated by President 
Wilson in the following papers: Messages 
to Congress, Reply to the Pope's Peace Pro- 
posal, Message to Russia, Flag Day Address, 
June 14, 1917. (b) As stated by members of 
the President's cabinet and members of Con- 
gress, notably Sec. Baker, Sec. Lansing, and 
Sec. Lane. 

3. War aims of the Central Powers. 

4. What failure to win the war would mean to 
Vermont boj^s and girls. 

5. Conclusions. 



82 A TEACHING PLAN 

Minor Problem number 2. How are our government's war 
needs supplied? 

1. Soldiers and sailors. 

2. Munitions and army supplies. 

3. Hospitals, surgeons, nurses, supplies. 

4. Ships. 

5. Food for ourselves and our allies. 

6. Fuel for ourselves and our allies. 

7. Money. 

(a) Amount needed. 

(b) Raised by (1) taxation and (2) borrow- 
ing (Bonds, Loans). 

8. How England, France, and Germany have 
supplied these needs. 

9. Conclusions. 

Minor Problem number 3. Our personal responsibility and 
opportunity. 

1. Why and how our government came into ex- 
istence. 

(a) What it does for us. 

(b) Our obligation in return. 

2. Need for united effort in order to preserve 
our national ideals — our government. 

3. Our responsibility as compared with that of 
older citizens. 

i. Aggregate importance of small loans and con- 
tributions. 

5. Our opportunities to render patriotic services. 

6. Conclusions. 

General conclusion as to the desirability of our making the 
investment as a patriotic duty. 

(B) As an Investment. 

Minor Problem number 1. What opportunities has one 
with a limited income to make investments in our community? 



A TEACHING PLAN 83 

1. Savings Banks, Postal Savings. 

2. Real Estate, live stock, etc. 

3. Borrowing from bank for investment. 

(a) Promissory note. 

(b) Security. 

(c) Interest. 

4. Types of life insurance. 

5. Stock in stock companies, corporations. Bro- 
ker, brokerage. 

6. Corporation, municipal, state bonds. 

7. Government bonds and savings stamps. 

8. Conclusions. 

Minor Problem number 2. How may^we determine the value 
of an investment? 

1. Safety. 

2. Net income from investment. 

3. Regularity of income. 

4. Expense connected with making the invest- 
ment. 

(a) Brokerage, Commissions, Fees, Bonus. 

5. Ease of making the investment .und collect- 
ing the income. Kinds of bonds, coupon, 
registered, etc. 

6. Daily market value as quoted in daily papers. 

7. Conditions which cause the value to fluctuate. 

8. Conclusions. 

Minor Problem number 3. How does the purchase of govern- 
ment savings stamps and bonds compare with other avail- 
able investments? 

1. Conclusions from minor problems one and two. 

2. Comparisons. 

3. How may they be purchased. 
General conclusions. 

Note to teachers: The general conclusions should involve 
definite plans of action as well as desirability of investment. 



SUGGESTIONS FOR TEACHERS. 

The fundamental purpose of this curriculum is to give pupils 
an understanding of bonds and related subjects and to create an 
intelligent interest in the purchase of government savings stamps. 
The subordinate purposes are: (1) to teach pupils how to in- 
The Plan vestigate and organize a subject of study; (2) to 
and its bring about a proper correlation in several school 
Purposes. subjects dealing with different phases of the same 
subject; (3) to show the proper place of numerical problem 
solving in the treatment of such a topic in the arithmetic class; 
(4) and in short to furnish a teaching plan worthy of imitation 
in the various subjects of study. 

The subject is to be approached and the material organized 
The around an appealing problem — one that appeals to 

Problem. ^^q pupils as their problem and one which they 
desire to study. 

An interest in the problem is usually aroused in a preliminary 
discussion where the subject is introduced and the pupils are 
free to express their opinions. The following principles should 
be observed: (1) The subject matter must deal with present 
day interests of the pupils. It must be intimately related with 
what they may hear, see and talk about outside of the school 
room. (2) The pupils must be dominant partners in the 
business of selecting the problem to be studied. (3) The 
careful wording of the problem is most essential 
thTprob^ both for clearness of understanding of what they are 
lem. trying to do and because upon the wording fre- 

quently depends the kind and amount of interest aroused. The 
judgment of the pupils themselves can be relied upon in this 
selection. (4) The manor problems showing upon what knowl- 
edge the solution of the main problem depends should be de- 
termined by the pupils under the direction of the teacher. The 
pupils are entitled to see the subject from end to end in order 
that they may know v/hy they are required to get certain in- 
formation. (5) In this type of work so many interesting 
''side issues" will arise that the teacher and pupils must con- 



SUGGESTIONS FOR TEACHERS 85 

stantly guard against being led away from the point under con- 
sideration. It is valuable training for pupils to select those 
things which are vitally related to the topic of study and to reject 
all else. Interesting problems suggested for future study should 
be recorded. (6) Pupils must come to definite conclusions and 
they should go on record by stating them clearly and concisely. 
Much otherwise good teaching is ineffective because teachers 
and pupils assemble facts but they arrive at no new conclusions. 
The children fail to see what it is all about. Teachers should 
bear in mind that it is just as important to finish a subject well as 
to start it well. The conclusion is really the most important 
part of the study. 

The foregoing curriculum is given for illustrative purposes. 
Pupils will be much more interested in one they prepare in their 
own class. If teachers follow this one they should j^^^ ^^ ^^^ 
study it with the pupils in its entirety before making the Gurri- 
a detailed study leading to the solution of the prob- ^" ""^' 
lems. A pupil will do much more systematic and effective work 
if he sees the entire field and knows the relation of each day's 
work to the general subject under consideration. 

Our main problem, ''Does a Vermont boy or girl who 
invests his savings in government savings stamps and bonds show 
good business judgment as well as a keen sense of patriotic 
duty?" was selected by the seventh and eighth grade ^ 
pupils in the Montpelier schools. It is divided into pianation 
two main parts: (1) the purchase of bonds as a ^ftheTeach- 

• • 1 1 /r>x 1 1 f 1 1 i^S Plan. 

patriotic duty, and (2) the purchase oi bonds as an 

investment. The first part of the subject should be dealt with 
in the civics or current history class while the other is being taught 
in the . arithmetic class. The minor problems which must be 
solved before it is possible to solve the main problem are : 

(A) Patriotic Duty, 

1. What is America fighting for? 

2. How are our government's war needs supplied? 

3. Our personal responsibility and opportunity. 



86 SUGGESTIONS FOR TEACHERS 

(B) As an Investment, 

1. What opportunities has one with a limited income 
to make investments in our community? 

2. How may we determine the value of an investment? 

3. How does the purchase of government savings 
stamps and bonds compare with other available 

• investments? 
A preliminary study is made of each minor problem 
and points to be investigated are noted. This work should be 
taken up by the class in order that they may appreciate the whole 
problem and to arouse an interest in it. Assignments are not 
made as so many pages of text. A minor problem 
the Pupils ^^ ^ P^^^ ^^ ^^ ^^ assigned. The pupil is to use the 
with the index in order to locate in the text such material as 
pfan, ^^ needs. To facilitate such work marginal notes 

are given which indicate the content of the para- 
graph. The pupils will be studying a definite subject rather 
than certain pages or paragraphs in the book. It is hoped that 
teachers will see the value of such assignments of work and make 
a more general use of it. 

It will be noted that much of the material may be used 
Use Material ^^ English classes and a study of European geo- 

in English graphy will help to clarify many points in the minds 
Classes. ^^ ^^^ ^^^-^^^ 

In the following suggestions the Roman numerals refer to 
the minor problems, the Arabic to the subdivisions. 

(A) As a Patriotic Duty (Civics or Current History) 

I. 1. Power of congress to declare war. Discuss 
Detailed reasons assigned for declaring war. 2. Careful 

for^Minor*^^ study of President Wilson's reasons for recommending 
Problem AI. declaration of war. Summarize the causes. Parts 
of the President's message are well worth com- 
mitting to memory by interested pupils. Compare 
the causes as stated by the president with those 
stated by others. 

3. Compare the war aims of the central powers 
with the war aims of America. Contrast attitude 



INVESTMENTS 87 

of the Kaiser and the President. Democracy vs. 
Autocracy. 4. Probable results if Germany 
should win. Brief study of freedom of our school 
system as compared with that of Germany. (See 
''Century" for Dec. 1917). Emphasize fact that 
interest is personal not simply a problem for grown- 
ups. 5. Each pupil should state in his own words 
an answer to the question, ''What is America fight- 
ing for?" Discuss these in class and let the class 
adopt an answer to the question. 

We are at war in a good cause. We must succeed. A II. 

Our needs are great. How are they to be supplied? Detailed 
1. Requirements for enlistment in various de- Suggestions 
partments. The draft law^ its purpose and how it Problem 
operates. A democratic army. (See Ladies Home ^ ^^• 
Journal Jan. 1918). 2. How the government is 
supplying munitions, etc. Congressional investi- 
gations. Use of private plants. Drafted men as- 
signed to work in munition plants. Work of women. 
Clothing and other supplies for soldiers. A fully 
equipped soldier. Needs of a million men. How 
paid for. 3. The government's provision for 
hospitals and medical supplies. The Red Cross — 
what it is, what it does — and how it is supported. 
Y. M. C. A., Y. M. H. A., K. of C. Other agencies. 
4. The need for ships. The building program. 
Transportation problems. Government operation 
of railroads. Coal and sugar shortages. How can 
we help? 5. Production and conservation. Mr. 
Hoover and his work. America's responsibility 
and our part in it. 6. Dr. Garfield and the fuel 
problem. The "Cut-a-cord-of-wood" movement. 
How can we help? 7. Power of congress to raise 
money. Kinds of taxes. (Direct, customs duties, 
excise, income, etc.) Loans. Little opportunity 
to borrow from other countries. We are the lenders 
in this war. The government must either tax the 



88 



INVESTMENTS 



A III. 

Detailed 
Suggestions 
for Minor 
Problem. 



A III. 



people or must borrow from them. Bonds evidence 
of loans made to our government. Use of bonds by 
corporations, towns, states, etc. (This work is 
paralleled in the arithmetic class by additional 
study and problem solving for illustrative purposes. 
See suggestions under B. I. 6.) If we lead up to the 
use of the word ''bond" in this way the pupils have 
a back ground for appreciating its purposes and 
nature. Examine a bond. 8. What we may learn 
by the experiences of. our allies. How they have 
shown their patriotism, etc. 9. A concise definite 
statement in answer to the question, ''How our 
government's needs are supplied?" 
1. Am^erica's aim.s now and in 1776. Recall pre- 
vious study made of what our government does for 
us and our obligation in return. 2. "Of the 
people, for the people, by the people." Frank- 
lin's advice to colonists concerning unity. En- 
tente AHies plans for united effort. Every citi- 
zen's war. 3. See A, I, 4. Our responsibility 
just as great, our cooperation just as important, 
our aid just as valuable as that of our elders. 
4. Why Secretary McAdoo and others prefer a 
large number of small bond holders to a small 
number of large bond holders. Number of people 
subscribing to liberty loans of 1917. Amount of 
loans. Amount to be raised by sale of savings 
stamps. $20 a person — man, woman and child. 
As an illustration of aggregate importance of small 
contributions call attention to results of efforts of 
Green Mountain Guards. 5. List opportunities 
for patriotic services which are open to Vermont 
boys and girls. Emphasize purchase of savings 
stamps. 6. Require each pupil to state with 
reasons his conception of his own responsibilitj^ 
and opportunity in helping to finance the 
war. 



INVESTMENTS 89 

As an Investment (Arithmetic class work.) (B) 

No new mathematical principles are involved in 
this work. The pupils should be made thoroughly 
familiar with the business setting which gives rise 
to the problem. The solution of actual numerical 
problems is incidental and reinforcive and affords 
an opportunity for the pupils to apply the mathe- 
matical principles with which they are acquainted. 
Much of the best class work in arithmetic in these 
subjects will not concern itself with numerical 
problem solving but will prepare the way for an 
intelligent interpretation of the problems. If the 
pupil understands just what the problem means 
its solution is easy. Types of problems in texts 
in rather general use in the state are referred to. 
Select such problems from the lists as pertain to the 
phase of the subject under consideration. It is 
very desirable to get the problem material from Proper Use of 
local, present day situations. Use newspaper Problems. 
quotations and by substituting present day prices, 
etc. modernize the problems given in the texts. 
Solve many new problems dealing with recent 
bond issues, government saving stamps, etc. All 
of this work will be very real and meaningful if 
presented as a live issue of the day. 

1. Savings banks in the community. How in- B I. 
terest is computed. Have pupils bring savings 

bank books to class and audit them. Compare 
savings bank deposits with postal savings. Note 
advantages and disadvantages, income etc. *See 
W. & S. pp. 383-388, E VI pp. 34-41, W. pp. 18- 
20, S-B pp. 233-239, H. pp. 213-215, 227-231, T. 
& B. p. 54. 

2. Money needed for real estate investments. 

*W. & S. — Wentworth & Smith Grammar School Arithmetic, Ginn & Co. S-B,— 
Silver Burdett Arithmetic, Book III. H. — Hamilton School Arithmetic, American Book Co. 
T. & B. — Teller & Brown A First Book in Business Method, Rand-McNai/y & Co. E.— Every- 
day Arithmetic, Book III, Houghton-Mifflin Co. W. — Walsh-Suzxallo Arithmetic, Business 
Practice, D. C. Heath & Co. 



90 INVESTMENTS 

How interest is charged on easy payment plan. 
See W. &. S pp. 434-435, E. VI pp. 41-46, W. p. 140. 

3. Borrowing money for investment. Security 
needed, personal, collateral, mortgages, etc. Notes, 
interest, rates, how computed, etc. See W. & S. 
pp. 393-396, S-B 240-245. H. 231-238. T. & B. 
pp. 77-82, 98-102, 223, 226. E. pp. 59-70. W. 
pp. 140-153. 

4. Kinds of life insurance. As an investment. 
Advantages and disadvantages over savings banks. 
How do these compare with postal savings, sav- 
ings stamps, etc.? Insured must pay for the pro- 
tection in case of death if he purchases an endow- 
ment policy, See W. & S. pp. 429-431; S-B pp. 
210-212; H. pp. 186-187; E. pp. 78-79 and 144- 
145; W. pp. 98-99. 

5. Study a local stock company. Are there part- 
nerships in community? Advantages of stock 
company over partnership. Read Vermont in- 
corporation laws. Form stock companies. Is any 
stock for sale? How would one desiring to pur- 
chase stock in a local company go about it? Why 
would he desire to own stock? How is his amount 
of earnings determined? Preferred stock and com- 
mon stock. Evidence of ownership. (Have stock 
certificate at school for pupils to examine.) Sup- 
pose you desire to invest in stock of a large rail- 
road company, how would you make the purchase? 
What opportunity has the broker to get informa- 
tion concerning stock for sale which you do not 
have? How does he charge for his services? Can 
you learn of the stock market daily? (Newspaper 
quotations should be studied and problems de- 
rived.) See W. & S. pp. 437-445. S-B pp. 217- 
227. H. pp. 248-255. T. & B. pp. 190-191, 182- 
190. E. pp. 44-50. W. pp. 184-198. 

6. How may a man who owns property but needs 



INVESTMENTS 91 

money raise it without selling property. (Mort- 
gage.) Compare with bonds issued by corpora- 
tions, etc. Rate of interest. Convertibility etc. 
See W. & S. 442-445, S-B pp. 217-227, H. 255-258. 
T. & B. pp. 223-231. E. pp. 50-53. W. pp. 199- 
202. 

7. Government bonds and stamps compared with 
corporation bonds. Lending money to govern- 
ment at a certain rate of interest. See E. p. 51. 
Solve many problems based on Liberty Loan 
Bonds, War savings stamps, etc. 8. During this 
study constant comparisons should be made. The 
pupils should list opportunities for investment in 
their community. 

1. Upon what does the safety of an investment B II. 
depend? Compare the safety of government bonds 

with other bonds, stocks, etc. See W. & S. pp. 
429-231. W. p. 138. E. VI pp. 35, 54, 56, 152. 

2. Income computed on par value but rate of 
income on investment determined by purchase 
(market) value. Probability of change in market 
value of government bonds. Examine quota- 
tions on government bonds. How can one invest 
in government bonds? 5. Make clear the ease with 
which they may be purchased. No brokerage, or 
commission. No taxes. See W. & S. pp. 439- 
441 and 444-445; S-B pp. 217-227; H. pp. 255-257; 
T. & B. p. 192. E. VI pp. 44-52. 6 & 7. Study 
newspaper quotations from day to day. Note Detailed 
variation in price. What conditions contribute to f^JJ-^lunor^^ 
fluctuation? See W. & S. pp. 444. T. & B. 185- Problem. 
193. E. VI p. 51. 8. Summarize ways for de- 
termining value of investment. See E. VI pp. 

54-58. W. p. 1, 18, 138; E. VI p. 57. 



92 INVESTMENTS 

B III. From conclusions in B I and B II classify avail- 
able investments as to desirability. Explain fully 
the savings stamp plan or purchase of government 
bonds. 

State fully and clearly your conclusion to the 
General . , , 

Conclusion, mam problem. 



INDEX 



All About W. S. S. 



What are They? 

They are War Savings Stamps; 

They are of two kinds: 

United States Thrift Stamps (25c. each). 
United States War Savings Stamps ($4 . 12 each). 

Sixteen United States Thrift Stamps plus 12 cents in cash in 
December, 1917, or January, 1918, may be exchanged for a War 
Savings Stamp which, when affixed to a War Savings Certifi- 
cate, is a Government obhgation to pay the holder $5 on Janu- 
ary 1, 1923. 

War Savings Stamps are as safe as the United States. 

Why Should I Buy Them? 

Because — we are at war; 

Because — the more we save, the more labor and material will be 

available for the use of the Government and for the 

support of our Army and Navy; 
Because — we must have dollars as well as men in the fight for 

freedom ; 
Because — they establish the soundest and simplest basis of saving, 

which is the key to individual success, 
Because — War Savings Stamps increase each month in value. 

How Can I Buy Them? 

As simply as buying postage stamps. 

Any man, woman, or child who can save 25 cents can obtain at 

any post office or bank a United States Thrift Stamp and a 

Thrift Card to which to attach it. 

Where Can I Buy Them? 

At the Post Office, Bank, Trust Company, and many other author- 
ized selling agencies. 

When Shall I Buy Them? 

Buy them now, because they cost one cent more every month 
after the 31st of January, 1918. 

The sooner you buy them, the more you save. 

The price of War Savings Stamps is as follows: 
Jan. $4.12 Apr. $4.15 July $4.18 Oct. $4.21 
Feb. 4.13 May 4.16 Aug. 4.19 Nov. 4.22 
Mar. 4.14 June 4.17 Sept. 4.20 Dec. 4.23 

Every Stamp helps to save a life. 
Every Stamp will help to end the war. 



INDEX 
A A 

Abraham, Father, 40. 

Advertising bad investments, 48-49, 

Airplanes, 25. 

American Library Association, 31. 

America's motive, 7-8. 

Ammunition, 33. 

Amusements for soldiers, 31. 

Arizona, 15. 

Arms, 33. 

Army, 

organization, 17; 

raising, 17. 
Articles of Association, 60. 
Austria, 10, 15. 
Aviation, 25. 
Ayer, Massachusetts, 22. 

B B 

Bagdad, 15. 
Bank, 

commissioner's warning to public, 47; 

savings, 49: 

by-laws, 50; 

postal savings, 55. 
Baker, Secretary of War, 10. 
Baltic, 10. 
Bankers, 47; 

Investment Association, 48. 
Beef, 27. 

Belgium, 9, 11, 30. 
Beneficiary, insurance, 55. 
Berlin, 15. 



96 INDEX 

B Bonds, 

abbreviations, 68; 

classes, 69-70; 

corporation, 68; 

coupon, 67; 

debenture, 66; 

government, 46, 48-49; 

government, as an investment, 68; 

government, quotations, 69; 

government, safety of, 69; 

industrial, 70; 

interest paid on, 67; 

liberty, see Liberty Bonds; 

liberty loan, 44; 

mortgage, 66; 

municipal, 70; 

municipal, as investment, 68; 

public utility, 70; 

railroad, 70; 

railroad quotations, 67 ; 

registered, 67, 72. 
Books, 31. 
Bread, war, 26. 
Brokers, 47, 62, 64. 
Brokerage, 64. 
Bulgaria, 10, 15. 
''Bulls and Bears", 65. 



Cantonments, 21. 
Capital; 58. 
Capital stock, 59. 
Certificate, stock, 59. 
Classification, draft law, 18-19. 
Clothing, 33. 
Coal, 27. 
Commissioner, bank, 47. 



INDEX 97 

Common stock, 61. C 

Compound interest, 51; 

benefits of, 54; 

grows rapidly, 52; 

progressive, 52. 

simple, 52. 
Congress, extra session of, 6; 

declaration of war, 8. 
Corn, 27. 
Corporations, 59; 

cooperative, 60; 

directors, 60; 

how organized, 59. 
Crowder, 18, 19. 
Curb prices, 66. 
Current History Magazine, quoted, 24, 45. 

D D 

Dairy products, 26, 27. 

Danger to United States, 11. 13. 

Debenture bonds, 66. 

Declaration of war, 8. 

Democracy, 8, 10, 16. 

Dependents, caring for, 33, 34. 

Deposits, in savings banks, 50, 

Destroyers, 33. 

Devens, Camp, 22. 

Diplomatic relations, breaking, 5. 

Directors, 60. 

Dividends, 60, 61. 

Divine right, 13. 

Draft law, 17. 

Duty, patriotic, 44, 46. 



E 

Earnings, 63. 

Economy, widespread, vital, 46; 
wise, 46. 



E 



^ INDEX 

E Edelsheim, Baron Franz Von, 13. 
Emergency Fleet Corporation, 25. 
Endowment Insurance, 55; 
as an investment, 57. 
England, sugar shortage, 27. 
European war, 5. 
Exports, 26. 
Extravagance, 34. 



Farm tools, 27. 
Fertilizers, 27. 
Fish, 27. 
Food, 

administration, 27; 

administrator, 26; 

control law, 27; 

need, 26, 33; 

public concern, 26. 
Ford, Henry, 

on thrift, 39. 
France, sugar shortage, 27. 
Franklin, Benjamin, 40, 42. 
Fuel, 

administrator, 27; 

control law, 27 ; 

needs for army and navy, 27; 

shortage, 27. 

G G 

German aviators, 11. 

German designs on America, 14. 

German war aims, 13, 15. 

Goodwill, 63. 

Grain, 26. 

Great Lakes, 22. 



INDEX 99 

H H 



Habit, 

how formed, 35; 

investment, 44. 
Halifax disaster, 31. 
Hill, James J., 38; 

idea of thrift, 39. 
Hospitals, 29. 
Hoarding, 27. 
Hoover, Herbert, 26. 



I 



Imperial ambitions, 15. 
Insurance, 

as an investment, 57; 

endowment, 55; 

for protection, 57; 

life, 55; 

soldiers' life, 33, 34. 

weeldy, 56. 
Interest, 

compound, 51; 

paid on bonds, 67; 

progressive compound, 52; 

savings bank, 49, 50; 

simple compound, 52. 
International law, 7. 
Investments, 

advertising, 48, 49; 

advice on, 47; 

an absolutely safe, 76 ; 

bad practices, 48, 49; 

chapter on, 47; 

corporation bonds, 68; 

element of thrift, 46, 47; 

essentials of good, 70, 71; 

government bonds, 68; 



100 INDEX 

I Investments, 

income, 63; 
judging value of, 63; 
municipal bonds, 68; 
poor, 47; 
safety of, 70-72. 
Investors, 

protection of, 47; 
young, warning to, 47. 
Ironcrosses, 12. 



J 

K 



Japan; 15. 



Kaiser, proclamations of, 13. 
Knights of Columbus, 29, 31. 
Kniffen, W. H., quoted, 36. 
Knitted goods, 29. 

L 

Labor shortage, 28. 
Lane, Secretary of Interior, 9. 
Lansing, Secretary of State, 11. 
Lauder Harry, 

ten thrift rules, 44. 
Liberty Loan Bonds, 44; 

amount sold, 33; 

as an investment, 70, 73 ; 

will sell at premium, 45. 
Libraries, 31. 
Licensing, 27. 
Listed stock, 62. 
Living, promote better, 41. 
Louvain, 11. 
Lusitania, 5. 



INDEX 101 

M M 

Mare Island, CaL, 22. 

Market value, 60. 

McAdoo, Secretary of Treasury, 33; 

urges self-denial, 45. 
Meat, 26. 

Merchant marine, 33. 
Mexico, 5, 15. 

Mexico, German attempts in, 15. 
Militarism, 10. 
Money, 

amount needed, 32; 

borrowing, 32, 33; 

how expended, 33 ; 

needs of nation, 32; 

raised by taxes, 32, 33. 
Mortgage bonds, 66. 
Mortgages, 47; 

as an investment, 58; 

definition, 52. 

N 
Navy organization, 22. ^ 

Navy training stations, 22. 
National army, 17, 21. 
National guard, 17, 21. 
Needs, government, 32, 34; 

how supplied, 34; 

of a million soldiers, 23. 
Neutrality proclamation, 5. 
New Mexico, 15. 
Newport, R. I., 22. 
Norfolk, Va., 22. 
Notes, secured by mortgage, 47. 
Nurses, Red Cross, 29. 

o O 

Official Bulletin, quoted, 44, 69, 70. 
Ordnance, 33. 
Orphans, war, 30. 



102 INDEX 



Partners, dormant, 58; 

profit-sharing, 58; 

real, 58; 

silent, 58. 
Partnership, 58; 

compared with corporation, 59. 
Par value, 60; 

profits computed on, 60. 
Patriotic duty, 45, 46. 
Patriotism, 46. 
Paying for the war, 32. 
Policy, insurance, 55; 

endowment, 55; 

limited payment, 56 ; 

ordinary life, 56 ; 

whole life, 56. 

'Toor Richard," sayings, 40. 
Pork, 27. 

Postal savings banks, 55. 
Postal savings stamps, 55. 
Preferred stock, 61; 

liberty bonds as, 73. 
Premium, computation of insurance, 55 ; 

on liberty bonds, 45. 
Premiums, insurance, table of, 56. 
President, see Wilson, 
Price fixing, 24, 27. 
Proverbs, Father Abraham's, 40. 
Puget Sound, 22. 



R 



R 



Real estate, as investment, 57, 58. 
Red Cross, 

emergency work. 31; 



INDEX 103 

Red Cross, Con.-^ R 

hospital bombed, 29; 

nurses, 29; 

reconstruction work, 30 ; 

recreation, 29; 

recuperation camps, 29 ; 

supplies, 30; 

surgical dressings, 30. 
Registration, 18. 
Regular army, 17. 
Resources, 41, 

Responsibility, personal, 10, 11. 
Revolutionary war, 10 
Roumania, 30. 
Russia, 30. 
Ruthless warfare, 7. 15. 



Saturday Evening Post, quoted, 74. 
Saving, 

certificates, 33; 

definition, 38; 

for future, 44; 

stamps, 33, 46. 
Savings Banks, 

by-laws, 50; 

compound interest paid, 51; 

deposits, 50; 

interest, 49, 50; 

postal, 55; 

Vermont Law, 49 ; 

withdrawals, 50. 
Schemes, fraudulent, 48. 
Secretary of interior, 9. 
Secretary of navy, 22. 



104 INDEX 

S Secretary of war, 10, 17. 
Security, 

bank book as collateral; 54 ; 

price of, 63. 
Selective draft, 17-21. 
Self-denial, practice, 45. 
Serbia, 15, 30. 
Service, 42, 43. 
Share of stock, 59. 
Shipping board, 24, 25. 
Ships, 24; 

German, 25; 

steel, 25; 

wooden, 25. 
Soldier, earning power, 34. 
Soldiers, needs of a million, 23. 
South America, 16. 
Spy system, German, 5. 

Stamps, see war savings and postal savings stamps. 
Statements, financial, 64. 
Stock, certificate, 59; 

common, 61; 

''Listed," 62; 

preferred, 61; 

transfer of, 62. 
Stock company, 59; 

cooperative, 60; 

how organized, 59. 
Stock exchange, 62; 

membership in, 62; 

New York, 62. 
Stockholders, 59. 
Stock, quotations, 65. 
Submarine, 

and food supply, 26; 

chasers, 33; 

warfare, 5, 6, 7, 11, 25. 



INDEX 105 

Supplies, 23. , • g 

Sugar scarcity, 27. 
Suggestions to teachers, 84, 



Taxes, exemptions, 72; 84. 

v/ar, 32. 
Teaching plan, 79. 
Texas^ 15. 
Thrift, 

antidote for worry, 37; 

definition, 35. 36; 

driving power of, 42; 

Ford on, 39; 

habit, 35, 37; 

Hill, idea of, 39; 

importance of, 35; 

investment element of, 46; 

learn it early, 39; 

makes for strength, 37 ; 

proverbs, 40; 

rules, 36, 38; 

rules, 36, 38; 

what it is not, 36; 

what it will do, 38. 
Thrift stamps, 76. 
Training camps, 21. 
Treasury, secretary of, 33. 
Turkey, 7, 15. . 



Value, market, 60; 

par, 60. 
VanderHp, Frank A., 74. 



106 INDEX 

W • w 

Wants, its causes, 41. 
War aims of United States, 

Baker, 10; 

Lane, 9; 

Lansing, 11; ,,'l 

in 1776, 10; 

Wilson, President. 8. .. ,. .;j 

War bread, 26. i •/'wi 

Warning to investors, 47. ;^; , i 

War savings certificates, 33. 
War savings stamps, 33, 74-76. 
War tax bill, 32. 
War taxes, 32. 
Waste, costly habit, 37. 
West Indies, 27. 
Wheat, 26, 27. 
William II, 13. 
Williams, Frank C, 47. 
Wilson, President, 

flag day address, 15; 

message to Congress, 6-8, 17 ; 

neutrality proclamation, 5; 

on cost of war, 45; 

organizing for war, 17. 
Women workers, 34. 



Y. M. C. A., 29, 31. 
Y. M. H. A., 29, 31. 

Youth's Companion, quoted, 42. 



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